A Dissertation On

Customer Relationship Management And Importance Of Relationship Marketing In The Banking Sector
This project report is being submitted as a part of the requirements of the MBA Program of Bangalore University. The project has been undertaken

Reg. No. 04VWCM 6117 With the guidance and support of Prof. Raja Sekhar Faculty: MBA



I, Shriya Mehrotra, student of MBA 4th semester, studying at Alliance Business Academy, Bangalore do here by declare that this project relating to the topic “Customer Relationship Management And Importance Of Relationship Marketing In The Banking Sector” had been prepared by me after undergoing the prescribed dissertation requirements a part of the objective of the MBA program of Bangalore University ( Batch of 2004-2006). The study has been done under the support and guidance of Prof. Raja Sekhar. I further declare that this project report has not been submitted earlier to any other University or Institute for the award of any Degree or Diploma. Date: Place: Shriya Mehrotra Reg. No. 04VWCM 6117


This is to certify that SHRIYA MEHROTRA, student of MBA 4th semester Reg. No. 04VWCM6117 of our Institute has completed his Dissertation report on the topic “Customer Relationship Management and Importance of Relationship marketing In the Banking Sector”, under my guidance, and that no part of this report has been submitted for the award of any other Degree or Diploma to any other Board or University.

Date: Place:

Prof. Raja Sekhar Faculty Alliance Business Academy


The satiation and euphoric that accompany the successful completion of task, would be incomplete without the mention of the people who made it possible. After all, the success is the epitome of hard work, severance, undeterred, zeal, stead fast determination and most of all encouraging guidance. So with immense gratitude, I acknowledge all those whose guidance and encouragement served as a “beacon light” and crowned our efforts with success. I sincerely thank Mr.Sudhir.G.Angur, Honorable president- Alliance Business Academy, for giving us an opportunity to take up this research. I thank him for being a constant source of inspiration and encouragement. I would like to express my profound sense of gratitude to Mr.B.V.Krishnamurthy, Director and executive vice president –Alliance Business Academy for providing me support to conduct this research With a deep sense of gratitude and indebtedness, I sincerely and whole heartedly thank Prof. Raja Sekhar, my project guide for giving me valuable suggestions and advice through out the execution of the project. Last but not the least, I would like to thank almighty God, my parents, and my friends who helped me gather these data and have sat with me for hours discussing about the project.


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Table 1 Demographics of the sample Table 2 Number of financial institution used Table 3 Frequency of travelling for contacting financial transactions Table 4 Importance and availability of technology and bank services Table 5 Access to various banking services Table 6 Use of various banking services Table 7 Requirements of banking services in the region Table 8 Use Automatic Teller Machines ( ATMs )

Figure 1 Workforce management system Figure 2 Evolution of CRM Figure 3 Customer 360 degrees Figure 4 E- Support Figure 5 Financial & Banking Technologies Figure 2-1 “tell me what I get if I do this” Figure 2-2 “I’ll do it myself when I’m ready”; “Use what I give You” Figure 2-3 “let me make a valid comparison” Figure 2-4 Helpfulness as hindrance Figure 2-5 Conflicting navigation system Figure 2-6 too many homes Figure 2-7 “Don’t lock me out”


Chapter 1
1.1 ‘Banking’ on CRM’ “Competition and globalisation of banking services are forcing banks to be productive and profitable. To retain High Net Worth individuals, banks should focus strongly on relationship management with customers. Innovative Customer Relationship Management (CRM) strategies and cutting edge software can help, to a great extent, in achieving the desired results. To provide customised services, banks are opening Personalised Boutiques which provide all the required financial needs of a customer”. The entire service industry is now metamorphosed to become customer- specific. In this context, the management of customer relationship in financial services industry demands special focus. Gone are the days when customers at a bank did not mind the long serpentine queues and waited patiently for their turn with a token in their hand. In today’s Internet era, no one has the leisure to wait. In this context, online banking is assuming a great significance. Today, banking is more customer-centric, unlike the yester when it was transaction-centric. Banks are increasingly focusing on the premise that customers choose on the service provider who differentiates through quick and efficient service. However, there is more to Customer Relationship Management (CRM) than just managing customers and analysing their behaviours. Banks are well aware that their success is predominantly dependent on the CRM strategies adopted by them. Service providers have recognised that good CRM bonds customers with the organisation for a longer term, resulting in increased revenues. With customers’ expectations becoming even more competitive, banks are coming up with a wide array of novel products and services every day. The challenge is for the banks to work towards ensuring that customers prefer their products and services over that of competing brands. The key to develop and nurture a close relationship with customers is by appreciating their needs and preferences and catering to their requirements. Leveraging on IT, to appropriately analyse and understand the needs of existing customers better, to ensure customer satisfaction, and exploring the possibility of cross-selling products to gain a competitive advantage are the other issues drawing attention and interest. With the opening up of the economy, a number of private sector banks have joined the fray and are offering a plethora of products and services- rechristening themselves as ‘Financial Boutiques’. Knowledge dissemination has been propelled by electronic and mass media campaigns. Today’s knowledgeable consumer is challenging the Indian retail banking industry to redefine itself. Thus in this current competitive scenario, for a bank to survive competition, succeed and make profit, there is hardly any option but to learn from and actively respond to consumers’ needs. Banks offering retail products need to reorient their


strategy from a product-centric to a customer-centric approach to attract and retain High Net Worth Individuals (HNI) and profitable customers as well. The battle of the banks, for gaining a greater slice of the market share, is taking on a new dimension. In the current falling interest rate scenario, banks are finding it increasingly difficult to meet the high growth expectations. In order to bolster their top lines, banks are in pursuit of newer ways and means of achieving organic growth through strategies that enable acquisition of new customers and retaining the loyalty of the existing customers. Success of a bank’s strategy towards customer acquisition will depend on its ability to develop customer insights and translate these into effective operating models. Ensuring a good customer experience at every customer touch point is the cornerstone of a successful growth strategy. A good customer experience will drive customer acquisition and promote customer retention, which translates into increased profits. This, in other words, is the hallmark of a successful CRM strategy. Emphasis on CRM arises on account of the challenges confronting retail managers----- managing to sustain and achieve growth and profits. Bankers are conscious of the relative costs of acquiring new customers. As top management emphasizes on “delivering results”, most bankers resort to customer grabbing, rather that customer cultivation and creation, with the result that “customer churn” is the call of the day. Incidentally, bankers are fully aware that losing the existing customer and acquiring new customers is an expensive affair. Moreover, it acts as a drain on the existing resources of the bank, which can be better employed for growth initiatives. Therefore, the challenge for the banks is to retain and deepen the profitability of the existing customer relationships, which is borne out by Nat West’s success. With the shift from a transaction-centric to a relationship-centric business approach, leveraging CRM has become sine qua non. Banks are adopting CRM to converge people, process and products more effectively to embark on the true relationship banking--- with the end result of accelerating the business momentum. Towards this end, experts propose various ideas and approaches to understand the fundamental marketing motivations driving the CRM trend in banks. To meet the challenging preferences of the customers and to stay ahead of competitors, bankers are bound to attract customers by providing a spectrum of services. Online banking, ATM banking and telebanking are just a few of them. Banks can enhance customer service by leveraging on technology, maintenance of efficient service delivery standards and business process reengineering. On their part, employees need to demonstrate certain service traits such as, putting on pleasing attire. At the end of the day, bankers should display a flair for cultivating a good relationship with customers through the mechanism of better customer service. Having understood the significance, it is prudent to plan for CRM in retail banks. To a large extent, the success of a CRM plan is dependent on the choice of the software. Towards this end, bankers should identify domain enterprise, credibility in the market, cost implementation and relationship with the vendor as factors on which vendor selection is based. The domains of software systems, multiply product database and tracking require specific CRM focus. Besides understanding the requirements for CRM implementations such as, the setting up of a


CRM cell and conducting surveys at a periodic intervals to track their effectiveness, banks need to understand how CRM assists them n customer identification, acquisition and retention. As a part of the planning process, frontline executives in banks should thoroughly understand their organisational structure, infrastructure, as well as the product environment. In this context, the management initiatives for CRM assume importance. A top-down CRM focused approach that starts with the top management, percolating and permeating to all levels of the CRM is a necessity in the present business scenario. Initiatives, such as, introducing CRM audit by independent teams to identify the existing lacunae, and plugging the loopholes in the CRM strategy as per the recommendations of the audit report, are required to be adopted by the banks for reaping benefits. It is observed that banks lose their best clients to competitors due to a variety of reasons. The rationale behind losing their best clients to other service providers such as non-brokerage houses and mutual fund houses needs to be analysed by banks. Experts opine that inefficient and improper service is one major reason. The remedies suggested by them are that banks should adopt customer relationship building approaches such as responding to complaints instantaneously, analyzing the attrition of the clients in a particular product, and rating of services across the network of branches, and the creation of a suggestion box to elicit the views and suggestion of their employees. Another dimension of the relationship building exercise is to obtain an electronic feedback from customers to understand the level of acceptance of existing products, which will facilitates in developing better products. Banks can gain a competitive advantage from CRM by becoming low-cost players in the market, achieving operational efficiency and maintaining customer loyalty. The ability to predict the products that customers are likely to purchase over a period of time, increased productivity of managerial executives, sales and customer service staff, and streamlining of business processes are some of the benefits retail banks obtain by taking to successful management of their customer relationships. Implementing the right CRM tools can enhance customer satisfaction leading to business growth. CRM enables organisations to motivate customers to initiate revenue-generating contacts. Several CRM issues such as, its effectiveness, application and challenges draw attention of the banking industry. Having witnessed the manner in which several global banks have benefited through CRM, the Indian retail banks too need to focus on and continuously invest in the customer relationship activities. The Indian banking scenario, which is still at an embryonic stage as far as the CRM domain is considered, needs to strive towards CRM implementation to meet the emerging demands of “universal banking”. 1.2 Defining CRM Customer Relationship Marketing is a practice that encompasses all marketing activities directed toward establishing, developing, and maintaining successful customer relationships. The focus of relationship marketing is on developing long-term relationships and improving corporate performance through customer loyalty and customer retention.


Customer Relationship Management (CRM) as the name suggests, the primary focal point is placed on the customer. The key objective is to increase customer value over time by increasing customer loyalty. If a company develops better customer relationships, it also improves business processes as well as its profits. In general, CRM is a more efficient automated method used to connect and improve all areas of business to focus on creating strong customer relationships. All forces are coupled together to save, improve, and acquire greater business to customer relationships. The most common areas of business that are positively affected include marketing, sales, and customer service strategies. CRM helps create time efficiency and savings on both sides of the business spectrum. Through correct implementation and use of CRM solutions, companies gain a better understanding of their strongest and weakest areas and how they can improve upon these. Therefore, customers gain better products and services from their businesses of choice. In order to achieve better insight on CRM, it is essential to consider all of its components. CRM- meaning Customer relationship management (CRM) is a business strategy that spans your entire organization from front office to back-office. It is a commitment you make to put customers at the heart of your enterprise. The right CRM strategy and solutions can help you securely, reliably and consistently: • Delight your customers every time they interact with your business by empowering them with anytime, anywhere, and any channel access to accurate information and more personalized service. • Reach more customers more effectively, increase customer retention and boost customer loyalty by leveraging opportunities to up-sell and cross-sell and driving repeat business at lower cost. • Drive improvements in business performance by providing your customers with the ability to access more information through self-service and assisted-service capabilities when it is convenient for them. • Enable virtualization in your enterprise as more of your people and resources extend beyond your offices and around the world. • Balance sophisticated functionality with rapid implementation and effective support for a faster return on your CRM investment. Today’s customers face a growing range of choices in the products and services they can buy. They base their choices on their perception of quality, value, and service. Each consumer has a specific behavior. But buying habits are sometimes difficult to understand. Therefore companies always want to gain some insight about consumer behavior and habits in order to better control this behavior. Having an impact on consumer behavior means being able to change consumer’s perception of the product or service, to establish a relation between the company and its clients.


1.3 Study of Banking Sector The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Ever since nationalization of banks took place in 1969, the public sector banks or the nationalized banks have acquired a prominent place and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting at higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the ‘high revenue’ niche retail segments. The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive players, capable of meeting the multifarious requirements of the large customer base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium. The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization The Reserve Bank of India act as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid also includes 24 foreign banks that have started their operations here. Under the ambit of these nationalized banks come the specialized banking institutions.


Chapter 2
2.1 Definition of banking The accepting for the purpose of lending or investment, of deposits from the public, repayable on demand or otherwise and withdrawal by cheques, draft or otherwise. (Banking Regulation Act) Dr. Paget in Law of Banking states, “No one and no body, corporate or otherwise, can be a banker who does not: i. Conduct Current Accounts ii. Pays cheques drawn on himself iii. Collects cheques for his customers A bank is therefore “Any company that transacts the business of banking in India”. Negotiable Instrument Act. Banker: Banker is “Any person acting as a banker” Negotiable Instrument Act. Customer: There must be some recognizable course or habit of dealing in the nature of regular banking business. A single transaction can constitute a customer; must have an account; dealing must be of a banking nature; some frequency in transactions is expected but is not essential. MAHATMA GANDHI’S DEFINITION OF CUSTOMER • A customer is not an outsider to our business. He is a definite part of it. A customer is not an interruption of our work. He is the purpose of it. • A customer is doing us a favour by letting us serve him. We are not doing him any favour. • A customer is not a cold statistic; he is a flesh and blood human being with feelings and emotions like our own. • A customer is not someone to argue or match wits with. He deserves courteous and attentive treatment. • A customer is not dependent on us. We are dependent on him. • A customer brings us his wants. It is our job to handle them properly and profitably both to him and us. • A customer makes it possible to pay our salary, whether we are a driver, plant or office employee.


Bank Customers • • • • • • • • • • • • • • • Minor Married women Pardanashin Woman Illiterate people Lunatics Trustees Executors and Administrators Power of Attorney Holders Joint Account Hindu undivided Family Partnership firm Limited companies Clubs, Societies and Charitable Institutions Non resident and Persons of India origin Foreigners

Before getting into the details of how CRM actually works in the financial sector, it is very important to “know your customer”. 2.2 Know Your Customer (KYC) It is very important to know the customer before having any kind of relationship with him (especially in the banking sector). This is important because of drugs smuggling/ trafficking, money laundering and terrorism coming up. If one has to build a relationship with the customer one should follow all the KYC norms laid down by RBI. Under the KYC a customer is: • A person or entity that maintains an account and/ or has a business relationship with the bank. • One on whose behalf an account is maintained. • Any person/ entity connected with financial transaction which can pose significant reputational or other risks. The RBI States: KYC must be the key principle for identification of an individual/ corporate for opening an account. This would entail verification through an introductory reference from an existing account holder, through a person known to the bank or on the basis of documents provided by the customer.


Chapter 3
3.1 CRM in banking Retail banking refers to mass-market banking where individual customers typically use banks for services such as savings and current accounts, mortgages, loans (e.g. personal, housing, auto, and educational), debit cards, credit cards, depository services, fixed deposits, investment advisory services (for high net worth individuals) etc. Before Internet era, consumers largely selected their banks based on how convenient the location of bank’s branches was to their homes or offices. With the Advent of new technologies in the business of bank, such as Internet banking and ATMs, now customers can freely chose any bank for their transactions. Thus the customer base of banks has increased, and so has the choices of customers for selecting the banks. This is just the beginning of the story. Due to globalization new generations of private sector banks and many foreign banks have also entered the market and they have brought with them several useful and innovative products. Due to forced competition, public sector banks are also becoming more technology savvy and customer oriented. Thus, Non-traditional competition, market consolidation, new technology, and the proliferation of the Internet are changing the competitive landscape of the retail banking industry. Today’ retail banking sector is characterized by following: • • • Multiple products (deposits, credit cards, insurance, investments and securities) Multiple channels of distribution (call center, branch, Internet and kiosk) Multiple customer groups (consumer, small business, and corporate)

Today, the customers have many expectations from bank such as (i) Service at reduced cost (ii) Service “Anytime Anywhere” (iii) Personalized Service With increased number of banks, products and services and practically nil switching costs, customers are easily switching banks whenever they find better services and products. Banks are finding it tough to get new customers and more importantly retain existing customers.


According to a research by Reichheld and Sasser in the Harvard Business Review, 5% increase in customer retention can increase profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer credit card market. Therefore banks are now stressing on retaining customers and increasing market share. 3.2 Needs of a Bank The banks now need to find out what to sell, whom to sell, when to sell, how to sell and how to be different to increase profitability. Banks need to differentiate themselves by adding value-added service, offerings and building long-term relationships with their customers through more customized products, enhanced value offerings, personalized services and increased accessibility. Banks also need to identify customers and products that would be most profitable and target customers with products that are most appropriate to their needs and serve the customers with greater cost efficiency. Banks also need to find out the avenues for increased customer satisfaction, which leads to increased customer loyalty. This may be explained better from two initiatives bank took in the past: 1. Earlier what drove many bankers to invest in ATMs was the promise of reduced branch cost, since customers would use them instead of a branch to transact business. But what was discovered is that the financial impact of ATMs is a marginal increase in fee income substantially offset by the cost of significant increases in the number of customer transactions. The value proposition, however, was a significant increase in that intangible called customer satisfaction. The increase in customer satisfaction has translated to loyalty that resulted in higher customer retention and growing franchise value. 2. Bankers invested in Internet banking, believing that the Internet was a lower-cost delivery channel and a way to increase sales. Studies have now shown, however, that the primary value of offering Internet banking services lies in the increased retention of highly valued customer segments. Again customer satisfaction drives the value proposition. Thus, banks need to retain existing customers with enhanced personalized services and products, which best suits their needs and satisfies them the most. 3.3 Utility of CRM in Banks CRM primarily caters to all interactions with the customers or potential customers, across multiple touch points including the Internet, bank branch, call center, field organization and other distribution channels. CRM can help banks in following ways: • Campaign Management - Banks need to identify customers, tailor products and services to meet their needs and sell these products to them. CRM achieves this through Campaign Management by analyzing data from banks internal applications or


by importing data from external applications to evaluate customer profitability and designing comprehensive customer profiles in terms of individual lifestyle preferences, income levels and other related criteria. Based on these profiles, banks can identify the most lucrative customers and customer segments, and execute targeted, personalized multi-channel marketing campaigns to reach these customers and maximize the lifetime value of those relationships. • Customer Information Consolidation - Instead of customer information being stored in product centric silos, (for e.g. separate databases of savings account & credit card customers), with CRM the information is stored in a customer centric manner covering all the products of the bank. CRM integrates various channels to deliver a host of services to customers, while aiding the functioning of the bank. Marketing Encyclopedia - Central repository for products, pricing and competitive information, as well as internal training material, sales presentations, proposal templates and marketing collateral. 360-degree view of company – This means whoever the bank speaks to, irrespective of whether the communication is from sales, finance or support, the bank is aware of the interaction. Removal of inconsistencies of data makes the client interaction processes smooth and efficient, thus leading to enhanced customer satisfaction. Personalized sales home page – CRM can provide a single view where Sales Mangers and agents can get all the most up-to-date information in one place, including opportunity, account, news, and expense report information. This would make sales decision fast and consistent. Lead and Opportunity Management - These enable organizations to effectively manage leads and opportunities and track the leads through deal closure, the required follow-up and interaction with the prospects. Activity Management – It helps managers to assign and track the activities of various members. Thus improved transparency leads to improved efficiency. Contact Center – It enables customer service agent to provide uniform service across multiple channels such as phone, Internet, email, Fax. Operational Inefficiency Removal – CRM can help in Strategy Formulation to eliminate current operational inefficiencies. An effective CRM solution supports all channels of customer interaction including telephone, fax, e-mail, the online portals, wireless devices, ATMs, and face-to-face contacts with bank personnel. It also links these customer touch points to an operations center and connects the operations center with the relevant internal and external business partners. Enhanced productivity – CRM can help in enhanced productivity of customers, partners and employees. 17

• • •

CRM with Business Intelligence - Banks need to analyze the performance of customer relationships, uncover trends in customer behavior, and understand the true business value of their customers. CRM with business intelligence allows banks to assess customer segments, which help them calculate the net present value (NPV) of a customer segment over a given period to derive customer lifetime value. Customers can be evaluated within a scoring framework. Combining the behavior key figure and frequency to monetary acquisition analysis with a marketing revenue quota can optimize acquisition costs and cut the number of inefficient activities. With such knowledge, banks can efficiently allocate resources to the most profitable customers and reengineer the unprofitable ones. Data warehousing solutions have been implemented in Citibank, Reserve Bank of India, State Bank of India, IDBI, ICICI, MaxTouch, ACC, National Stock Exchange and PepsiCo. And Business Intelligence players hope many more will follow suit.

A word of caution…. Customers may not want what they get: A CRM system apart from improving front office operations and customer servicing also helps in coping with many services that do not need manual intervention. These are serviced by channels like IVR, Internet and ATM. Customers can get account information, information on credit balance, issue instructions for drafts or even transact through these. At the same time there may be a few customers who still prefer the traditional methods of banking. Banks need to be flexible enough to continue to extend the "personal touch" that such customers prefer. Make changes internally before going for CRM: Many banks have spent a lot of money on CRM, finding it easier to buy CRM technology than to make the major internal changes necessary to really make CRM work for them. Unfortunately for these banks, the software has often failed to deliver. 3.4 CRM is Business Transformation Too often banks have focused on the wrong areas of CRM. CRM is really about business transformation—changing the business from services-centric to customer-centric. Have defined Objectives - Many CRM implementations have been approved without examining aspects like profitability, turnover etc. CRM implementations should have well defined objectives, such as RoI, Sales etc. Consider Complete Life Cycle Costs while budgeting - Measurements of profit are often constructed to embrace only the initial cost of sale. This is of little use if the ongoing cost of servicing a customer outweigh the margin of profit that customer is generating. It is critical that banks have recognized and embraced the importance of the trend towards customer development, and that this is reflected in actual marketing budget allocation.


3.5 CRM Implementation in Banks in India According to Nasscom report “Strategic Review 2004”, Indian CRM market was estimated at US $ 14 million and is forecast to grow to US $ 26 million in 2005. Banking and financial services segment has a high growth potential and accounts for 22 percent of CRM license revenue. There are many banks such as ICICI Bank, HDFC Bank and Citibank, which are using CRM products. Disciplined work along four dimensions can significantly improve results from CRM initiatives: Customer Segmentation- Do intensive data analysis and value-based segmentation to highlight the value of different customer segments and the underlying drivers of that value. Design programs- Design innovative programs focusing on customer acquisition, cross-sell, retention, loyalty, and customer service, based on customer insights, experience and industry best practices. Design Processes- Design internal and external processes to support and sustain successful programs. Good Decisions based on Right Information- The information from a CRM program can often guide better operational business decisions at many levels of the organization. Gather customer information at a broader set of touch-points, perform in-depth analysis, and make critical information available to relevant stakeholders. The retail banking industry is undergoing revolutionary change. There are many players and competition is tough. Customer Relationship Management is an important weapon in this fight. The ability to mass customize the customer experience and refresh the value proposition is necessary to retain the right to do business with the customer. Consolidation and technology would become must for sustenance and growth. The pressure will be on banks to integrate data from every channel and know what customers say so that the banks deliver what they want. As the competitions increase, banks will require the robust CRM functionalities in order to manage their most valued asset – their customers.


Chapter 4
4.1 Consumer Exclusion and Social Responsibility in Marketing Decisions The radical changes occurring in the micro and macro environment, which dynamically affect the marketplace and its participants, are widely known. Both the industrial and the academic communities have to realize the need of a re-determination and re-evaluation of many basic and traditional concepts of the strategic marketing plan. The defenders of the concept of globalization argue that it ideally leads to a multi/cross cultural and without boundaries world. In this context, there is a need of a worldwide community to capitalize effectively and efficiently the opportunities based on the principles of the "system". It is certain that technology has a pivotal role in the context of globalization. Moreover, technology is being presented as the magic "stick" that could eventually overcome any obstacle or problem and create a worldwide community to sharing equal opportunities in progress, education, communication and information. This is of great importance only when it is clear that technology has to be user/citizen oriented and publicly accessible. Considering the implementation of eventual globalization it is crucial to remember some of the basic axis of the concept. For example, the creation of a global community has to underline and incorporate local and regional social characteristics. In practice this can be translated into specific directions for public and private organizations and their various orientations in order to provide opportunities at local and regional levels. What happens in the real world when attempting to create the "global community"? Is there any re-orientation of the aims and objectives instigated by industries? How do companies target the market in terms of geographical dispersion? Which are the main criteria when evaluating the selected target markets? Is there any "space" to serve small or isolated communities? Is there any possibility, that the traditional marketing concepts as well as global management principles and foundations, have been used as a cover in various decisions concerning the selection of target markets, in contradiction to the new role they have to play in the adoption of the globalization concept? The focus of this paper is on the companies' role in the implementation of globalization under their social responsibility's point of view and the re-thinking about some basic marketing concepts, as a direct consequence. Moreover, the authors argue that companies have to be repositioned in the society as well as in front of their selves, in order to create a new contemporary profile, in tune with the needs and evolution even of the regional and local communities. It is known that companies often underline their role within the society as the meaning of their new profile and orientation. However, the concept of societal marketing having as its core theme the company's orientation toward the well-being of the customer and generally the society creates at the same time a field of dialog between the academic community and the industry. 20

Marketing should always be addressed to customers in order to gain the answers it looks for, to all its inquiries. Marketing ethicists have long criticized some marketers for making nonsocially responsible or even unethical decisions in the market selection. These issues have been referred to as the ethical issues of inclusion and exclusion and these are the basic axis that marketers have to follow in order to adopt a new orientation in the context of globalization (An example of an exclusion decision is not providing a needed product / service to a segment of the population which needs it ). It is widely accepted that the social role of companies is manifested by the improvement of the living standards of the society. But this is to ascertain that when social exclusion occurs, then the living standards become even lower. Financial exclusion could be experienced in many different ways. Its key characteristic is the inability of some customers to access necessary financial services in an appropriate form. It might be caused by macro-economic factors and facts or, of course, as the result of decisions made by the management of a specific company or even by the whole industry. Particular conditions related to the marketing mix factors (marketing exclusion), strongly related to a previous experience (condition exclusions), such as a high - not affordable price (price exclusion), the lack of accessibility, due to a certain distribution-related decision (access exclusion), not matching image (as a result of false or "correct" perceptions), may create barriers between the customer and the company that do not support a further relationship. However, not all customers experiencing financial exclusion are of any interest for a company. Financial exclusion also is accepting self-exclusion. A decision made by the customer as a result of dissatisfaction from a previously related experience. Referring to the specific example of bank services, offered in isolated areas in India, we can see that in the vast majority of the small isolated islands in India, not only technology aided banking services, but even traditional local bank branches are not provided. In these cases, when this kind of exclusion occurs, the local post office branches are servicing customers. However, as probably expected, they are providing only the most common banking transactions, and of course, from the strategic point of view, any mentioning about "corporate identity building" and "corporate / brand equity building" is to be avoided. This is because exclusion decisions have already been taken and implemented. In any case, particularly when talking about service provision, the customer is definitely an integral part of the marketing and delivery process. However, the service provider via the implemented processes and the humans involved is the one with the determining role in its implementation .Services are becoming more and more a major competitive tool, even in the physical goods industries, necessitating a close relationship, often called a strategic partnership Financial exclusion is strongly related to service providing. In some cases the lack of the provision of financial services becomes unjustified having in mind the opportunities provided by information technology. This is exactly the case, when referring to the banking industry.


This piece of research reveals the correlation between the geographical and financial exclusion concerning two geographical remote areas in India. The study identifies the banking attitudes of a customer segment that hasn't been investigated in the past; those who have never been included. It examines the expectations and the satisfaction of the banking services, the use of banking technologies and the usage of available banking products, by the inhabitants of two remote and isolated islands in Greece. In these islands fully developed financial services have never been offered. 4.2 FIELD RESEARCH OBJECTIVES Financial exclusion is often largely attributed to structural changes in the financial services sector, including increased competition from new entrants in the markets, mergers and information technology. All these characteristics, resulted in the development of a combination of tactics related to the adoption of cost cutting activities and increased emphasis on market segmentation and appropriate targeting, are present in the banking sector in India. The inhabitants of isolated areas cannot satisfy their banking needs although they have a healthy income profile and financial strength. Only few financial services were traditionally offered in these areas. Nowadays, due to the increased competition in the market, these neglected customer segments can be of interest to the banking industry. There are many small isolated islands with no traditional local bank branches in India. In the vast majority of them, no technology aided banking services are provided. When available, the most common banking transactions are often provided by the local post office. Banking needs, the familiarity with banking services and the use of technology for the consumption of these services have been the subject area of previous research. However, little is known about the above and the elements contributing to satisfaction for people who have always experienced financial exclusion and are not familiar with technology. Lack of awareness in the use of technology and limited contact with payment systems, such as cheques and credit cards is the norm in isolated areas. Contrary to common belief, these conditions can accelerate the use of new technologies and modern financial products. This study was designed to focus on a distant, isolated population and: Investigates the banking services currently used by customers. • Explores their banking needs. • Identifies their perceptions of the existing banking services. • Investigates the usage of virtual banking services. • Investigates their attitudes towards the provision of unmanned banking services via Information Technology. The research is exploratory, as the available information in relation to customers living in isolated areas, is insufficient on these elements. However, this paper attempts to examine the issues further.


4.3 METHODOLOGY Sampling Frame Two of the most isolated suburbs, Sitapur and Biswan, were chosen as collecting data from all the remote Uttar Pradesh cities is almost impossible, due to resource limitations. Sitapur is a suburb and attracts mostly business class. In 1991 it had a population of 267, living in two villages. The area of Biswan is somewhat bigger, has a long tradition in sugarcane farming and attracts manufactures of sugar and allied products.In both places there is a post office, offering a limited range of financial products. It is worthy to mention that, it rarely happens to the citizens of those areas to be selected as respondents to surveys. The inhabitants experience a certain kind of "exclusion" by both the private sector and the public sector, not only as customers or as audience but even as citizens that "their opinion counts". So, they feel excluded not only from what is happening but even from what is being planned or prepared by almost all sectors. As expected, this kind of exclusion leads them to a greater disappointment in conjunction with the other forms of exclusion. A total of 359 people (representing approximately 51% of the inhabitants of the islands) were interviewed (table 1). Of those, 190 were interviewed in Sitapur and 169 in Biswan. The men had stayed in areas other than the place of origin; further more they were significantly better educated than women. It is not surprising to find that a quarter of the inhabitants are retired as the population of these islands is ageing, and. The education of the sample is representative of the educational levels of isolated areas, but not of the whole of Greece, where most people graduate from high school and the majority continue a higher education. Almost 59% of the respondents never went to High school, while only 12.5% of the sample had a higher education qualification. The educational profiles were more extreme in those that never left the islands.


4.4 TABLE 1. DEMOGRAPHICS OF THE SAMPLE Data Collection, Research Instrument and Procedures TABLE 1. Demographics of the sample Never lived away Total

% 39.04 60.96 13.90 12.30 19.25 17.11 10.16 27.27 6.95 57.75 28.34 5.88 1.07 6.95 1.07 3.21 25.13 40.11 3.74 5.88 7.49 2.14 4.28 100.00

Lived away>1 Total year Total % Total % 112 60 19 28 27 33 22 43 8 81 46 34 3 4 1 11 42 34 4 23 35 5 13 172 65.12 34.88 11.05 16.28 15.70 19.19 12.79 25.00 4.65 47.09 26.74 19.77 1.74 2.33 0.58 6.40 24.42 19.77 2.33 13.37 20.35 2.91 7.56 100.00 185 51.53 174 48.47 45 51 63 65 41 94 21 189 99 45 5 17 3 17 89 109 11 34 49 9 21 359 12.53 14.21 17.55 18.11 11.42 26.18 5.85 52.65 27.6 12.53 1.39 4.74 0.84 4.74 24.79 30.36 3.06 9.47 13.65 2.51 5.85 100.00

Male Female Age 18 – 25 25 – 35 35 – 45 45 – 55 55 – 65 65 +

73 114 26 23 36 32 19 51 13 108 53 11 2

None Primary School High School University Other Occupation Farmer Trader Salaried Retired Housekeeper


13 2 6 47 75 7 Civil Servant 11 Businessman 14 Privately employed 4 Other 8 187

The actual study was conducted over a period of two months in three stages: A draft questionnaire was developed during the first stage. The questionnaire was pre-tested in Lucknow, the capital of Uttar Pradesh. Since the sampling frame contained respondents, who were quite different from those in Lucknow, it was decided that the questionnaire should be pre-tested for a second time, under real circumstances. In addition, it was appreciated that


identifying and approaching the inhabitants of these isolated areas was very difficult and contacts with the local opinion leaders should be developed to overcome these problems. During the second stage, the final research instrument was developed and links with the local communities were established. Ten semi-structured in depth interviews were conducted with local opinion leaders (i.e. the Mukhiya, the priest, teachers in the local schools). Basic information and support in reaching the general population was given. Five focus groups with inhabitants of each suburb, helped in the development of a general understanding of the situation and attitudes towards both technology and banking, followed. During the focus groups, the questionnaire was pre-tested. It was apparent that the prospective respondents, although helpful and very interested to express their opinions, had difficulties in understanding and filling it in. This was mostly due to their limited experience in participating in research and answering closed questions. To overcome this problem and in order to capture the true perceptions of this particular sample, it was clear that data should be collected by person-administered interviews. During the last stage, the quantitative data was collected via in-home interviews and interviews in public places that locals tend to visit on a regular basis. The fieldwork for this part of the study was conducted in four days. I collected the quantitative data. 4.5 Data Analysis Research on the inhabitants' views in these areas is relatively limited. Because of the exploratory nature of all the issues examined, descriptive statistics are displayed. As a next step in our analysis, we performed a series of extensive statistical analysis, using T-Tests, chisquare statistics, in order to identify the exact relationships. More precisely, in order to examine the hypotheses that the opinion of people in the two samples and the fact that the one group has experienced living away from the island was not related, independent samples t-test was used. To assess the ranking of different variables, by examining the mean rank differences, Friedman two-way ANOVA test was conducted. Pearson χ2 was also used in order to examine comparisons of categorical data. For all tests, observed significance level of the test (p) less than 0.05, the hypothesis that the variables under investigation are independent was rejected. 4.6 FINDINGS A primary objective of this study was to investigate the banking services currently used by customers, in order to reveal the provision of those services in the particular areas. In addition, the study highlights their perceptions about the provided services. In this section, we discuss the key findings of this study, in order to provide also a new perspective on companies' social responsibility issues combining those with "exclusion", particularly social and financial one. As expected, the population of those remote areas is not denied access to financial services, as long as they make the effort to obtain them. As shown on table 2, almost all respondents have some sort of bank account. An interesting finding is that a high percentage of the sample


(56.57%), are banking with more than one financial institution. Those respondents who have lived away does not presents any clear differentiation of those who have spent all their lives in the island regarding the use a different number of financial institutions from those (Pearson χ2= 8.97, p= 0.06). TABLE 2. Number of financial institutions used Never lived Away Total % None 2 1.1 One 90 48.1 Two 76 40.6 Three 15 8.0 Four or more 4 2.1 Total 187 100.0 Lived away> 1 year Total % 0 0.00 65 37.8 75 43.6 27 15.7 5 2.9 172 100.0 Total Total 2 155 151 42 9 359 % 0.56 43.18 42.06 11.70 2.51 100.00

As far as the conditions of use is concerned, it is clear however that 30.37% of the sample claim that they need to travel to another island at least once every two weeks to make their required transactions. Only 5.29% of the sample cited that they are able to make them all in the island they live on (table 3). The results highlight that it is almost compulsory for someone who wants to satisfy banking needs to visit another island, while all residents travel with a similar frequency (Pearson x2= 2.11, p=0.72). This cause additional cost to them associated with banking transactions, since staying away overnight or even for a longer period is often necessary due to the frequency of the islands' connection by boat and the weather conditions. TABLE 3. Frequency of travelling for contacting financial transactions Never lived Away Total % 5 2.7 12 6.4 44 23.5 62 33.2 64 34.2 187 100.0 Lived away> 1 year Total % 9 5.2 11 6.4 44 25.6 56 32.6 52 30.2 172 100.0 Total Total 44 65 129 102 19 359 % 12.26 18.11 35.93 28.41 5.29 100.00

Once a week Once per 15 days Once a month Less than once a month Never TOTAL

An interesting finding on a related topic, i.e. technology and its contribution to the areas wellbeing is that all respondents identified technology as a key factor in the development of their area (table 4), since it was revealed that they believe that unless the area develops, more qualified young people will stay there. Similarly to banking services availability, technology was also found to be far from being adequate. Those that have lived away were even more disappointed with the services provided, although the observed difference was not statistically significant. 26

Respondents provided low scores regarding their ability to access to the various banking services in their area (table 5). Only when referring to the most basic services (withdrawal/deposit) this is not the case. More precisely, the people feel that payment of bills is the service to which they have the most access to in their region, followed by withdrawal/deposit (x2=1108, a=0.00). Particularly, those respondents that have been away for a long time, and therefore they have experienced ATM and other technologies usage in the past, they feel that they do not receive the quality of service they perceive as standard. TABLE 4. Importance and availability of technology and bank services Never lived Lived Away away> 1 year Mean SD Mean SD Technology is a key factor for the 4.81 0.71 4.83 0.49 development of the region The needed banking services are 2.10 1.36 1.85 1.25 available in my region The need for financial services 4.78 0.73 4.80 0.63 increase in summer 1= strongly disagree, 5= strongly agree Total Mean SD t-value p 4.82 0.61 -0.20 0.84 1.98 1.31 1.79 4.79 0.68 -0.22 0.07 0.83


TABLE 5. Access to various banking services Never lived Lived Away away> 1 year Mean SD Mean SD Withdrawal– Deposit 3.84 Loans 1.41 Subsidies 1.75 Credit cards payments 1.44 Payment of bills 3.91 Foreign currency exchange 2.23 Stock exchange 1.23 transactions 1= very difficult, 5= very easy 1.36 0.88 1.23 1.00 1.36 1.52 0.73 3.35 1.29 1.58 1.31 3.72 2.12 1.21 1.51 0.73 1.06 0.84 1.59 1.51 0.67 Total Mea n 3.61 1.35 1.67 1.38 3.82 2.18 1.22 t-test SD t-value p 1.45 0.81 1.15 0.93 1.48 1.51 0.70 3.24 1.41 1.38 1.39 1.28 0.71 0.28 0.00 0.16 0.17 0.17 0.20 0.48 0.78 Friedma n Mean Rank 5.75 3.02 3.44 3.03 5.89 4.06 2.81

The great majority of the respondents (67%) claim that they perform bank transactions at least once a month. Again, the basic banking services (withdrawals/deposits and payment of bills) are those that are used the most in the area (x2=1158, a=0.00) (table 6). Those that have lived away, appear to use the basic bank services more than the others and make more stock exchange transactions, although the latter is still one of the least used services. Only a small % of respondents, indicated to make use of any kind of credit cards for their transactions. It seems that it is the custom of the area to pay in cash. TABLE 6. Use of various banking services Never lived Away Mea SD n Withdrawal– Deposit 2.84 0.92 Loans 1.14 0.47 Subsidies 1.29 0.67 Credit cards payments 1.24 0.77 Payment of bills 2.80 1.26 Foreign currency exchange 1.52 0.98 Stock exchange 1.09 0.47 transactions 1= very rarely, 5 = very often Lived away> 1 year Mea SD n 3.05 0.94 1.15 0.46 1.19 0.47 1.40 0.98 2.83 1.20 1.47 0.94 1.26 0.86 Total Mea SD n 2.94 0.93 1.14 0.46 1.24 0.58 1.31 0.88 2.81 1.23 1.49 0.96 1.17 0.69 t-test t-value p -2.12 -0.25 1.67 -1.67 -0.18 0.53 -2.43 0.03 0.80 0.10 0.10 0.86 0.60 0.02 Friedma n Mean Rank 6.08 3.12 3.31 3.26 5.62 3.57 3.04


As shown on the following table (table 6/7), the respondents all shared the same perceptions in relation to the standards of the banking services offered in their region. They did not express any major concerns in terms of the security of the banking services and were reasonably content with the reliability of the systems. However they all expressed some discomfort in relation to the speed of the system. But, their major concern refers to the coverage of the banking networks. When compared with the others criteria measured, the findings imply that they all agree that the quality of the service provided was not what they expected. Among all requirements of the banking services in the region, only "personal contact" received a slightly lower mean score, implying that all respondents agreed that reliability, speed, security and convenience are most important features of the provided banking services (table 8). Those that have spent some time away from the native place believed that this feature is of less importance than those that have stayed on the island for most of their lives and are used to doing business through personal contact. When paired sample tests were performed, it was revealed that there was no difference in the perception of the importance of all these elements (a=.00). TABLE 7. Requirements of the banking services in the region Never lived Lived away> Away 1 year Mean SD Mean SD Reliability 4.92 0.31 4.89 0.32 Speed 4.91 0.32 4.88 0.34 Security 4.94 0.27 4.93 0.30 Convenience 4.89 0.39 4.90 0.43 Personal contact 3.74 1.54 3.39 1.64 1= strongly disagree, 5= strongly agree Total Mean SD 4.90 0.33 4.90 0.33 4.93 0.28 4.89 0.41 3.57 1.60 t-value 0.88 0.89 0.19 -0.31 2.07 P 0.40 0.38 0.85 0.76 0.04

The use of ATM services are not at all popular, as 71% of the sample cited to be non users of ATM services, or even in the past "they have never used" an ATM (table 9). However, this finding was somewhat supported by the views expressed during the personal interviews and the focus groups, where the participants linked their desire to have some personal contact with the bank employees with the fact that they have to make an actual journey to visit the bank. This could be a plausible explanation, since they use other technology. For example, more than 44% of the respondents reported that they own and use a mobile phone. Although all respondents appear to have limited experience in using ATMs, the results indicated slightly differences among those who have lived away and those who have stayed for their whole lives on the island, (Pearson x2=8.691, a=.00). Once again, it seems that the experience of living in other, more technologically developed areas, or in other words, not excluded areas, appears to influence positively the potentiality of ATMs.


TABLE 8. Use of Automatic Teller Machines (ATMs') Never lived Away Total % 42 22.46 145 77.54 187 100.00 Lived away > 1 Year Total % 63 36.63 109 63.37 172 100.00 Total Total 105 254 359 % 29.25 70.75 100.00

I have used ATMs I have never used ATMs Total

In the in depth interviews, it was revealed that the inhabitants of these islands were experiencing difficulties in using most of the highly sophisticated equipment, and ATMs were perceived as such. Some of the people interviewed felt that using an ATM machine is risky, and were not willing to trust the equipment. This is mainly due to problems with the telephone connections used at present to support the ATM network. It was not surprising, after all, that less than 2% of the respondents have ever used a bank's web site. When they were asked, it was clear that the Internet was only used for information gathering. None have used the Internet for banking. The inhabitants of these islands were security conscious, and believed that using a computer to perform financial transactions is highly dangerous. Moreover, the exclusion of these places entail also very important social and political implications. By explicitly considering these issues, one can argue, based not only on their intention but also on their potential, that many of the respondents could (and therefore should) be among the target-customers of the major banks of the country. However this does not occur. Is that the "real world" bank deny their social role, or it is the result of their interpretation of some basic marketing concepts?


Chapter 5
5.1 Setting socially responsible Marketing Objectives and Strategy In the free market economies, business organizations are free to choose what goods and services they produce, the processes by which they produce as well as the markets they aim to serve. So, a social service does not necessarily mean the offer of specific additional services to particular customers. It means the company's orientation in offering its products/services in a more "social way". In market economies where companies do have a high degree of autonomy, the manner in which organizations make strategic decisions, taking into consideration the Social Responsibility notion, becomes in itself a matter of discretion. As Frederick et al, (1992) suggests there are 3 broad views of the social contribution of the company. The so called "social obligation", adopted by companies which act, in accordance to what the law requires. The 'social responsiveness", where the companies are more open to moral issues and influenced by involving the acting social groups, and finally, "social responsibility" under which companies recognize a wider spectrum of relationships with the different stakeholders and enhance certain levels of interaction with such groups. So, it is important to recognize that the concepts of "social responsibility" and "any kind of exclusion" are not theoretical claims or even new, "smart" ways of determination of a "competitive advantage. Instead, it is a certain philosophy of doing business with serious consequences to society's well being. The real importance of company’s social responsibility has not to do with its reactions to particular facts or events, but to their view, to their contribution and role to the society. Therefore, the subject of social responsibility of a particular company shouldn't be left to ones managers hands, but it should be the core concern behind a company's existence. Apart from Societal Marketing, which should also focus on a long-term orientation towards customer satisfaction without excluding of course profitability and stable growth, Relationship Marketing focuses on the creation of long-term relationship between various participants - members of the particular network, involved in a process based on the axioms of "mutual exchange and fulfillment of promises". Moreover, as Kantner claims a "successful partnership manage the relationship, not just the deal". Therefore, the new emerging marketing paradigm could thus be called relationship orientation, where strength and quality of the relationship as well as the quality and profitability of the relationship play significant role. But the question arises exactly there, i.e. in the definition / identification of the "various participants-members of the particular network who are going to be involved in a relationship"! Who decides the criteria under which somebody will become member of the "network"?


Even, the societal marketing concept holds that the organization's task is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being . So, it is already clear, that the societal marketing concept requires the promotion of "proper consumption values" so that "long-run consumer welfare" may be attained. Thus, it requires that the business organization includes social, ethical and ecological considerations in its, product and market planning. But, how much emphasis has been given to the particular target markets and what balances with society as a whole? Referring to the traditional Marketing concepts of "segmenting - targeting - positioning", one could claim that the "focused targeting" is among the most successful strategic options. The question is about the criteria this strategic decision will be implemented. The main purpose of segmenting is to create substantial, measurable, accessible customer segments in order to target effectively and efficiently in the future. Nowadays, "customer valuation" forces to a more rationalized way of usage of the above mentioned strategic tools, since the customer of the company becomes the "consumer of the wealth of the organization". As a result, value is seen as something that has to be extracted from customers to create shareholder value and all customers should be shown sufficient returns to the organization. Therefore, we strongly believe that under the scope of re-formulating the companies' roles in society, one should re-define the segmentation criteria as well. Although traditionally, this has been implemented based on product-related variables (i.e. product usage and product benefit) and consumer related variables (i.e. demographics, lifestyle, self-concept etc), community’s "well being" has to become the "compass" of segmentation criteria, setting. The traditional marketers claim that "consumer/customer is the focus" and that consumer's needs and desires are the raison-dieter for marketing (the marketing concept can be described as an integrated effort aimed at providing customer satisfaction…). Is it not the appropriate time to focus on the consumers' well being and make use of the several variables according to this notion of well being? Otherwise, the claim "consumer is the focus" is not totally true and it should be modified to "consumer of our convenience is the focus".


5.2 Customer Dialogue Builds Loyalty & Profit Customers and potential customers are getting more sophisticated. The very marketing techniques used to separate the customer from their hard earned money are, helping, by training both the old and newer generations of customers to be more wary and smarter. Customers want to trust the companies they buy from and in some case may even value a relationship of a sort. Managing Customer experience is the biggest challenge faced by businesses today. The ability to acquire, retain and grow customer relationships is determined by an organization's ability to quickly adapt to changing customer needs. This demands an integrated approach to managing customer interactions. 5.3 Customer 360° It is in line with these needs that a concept called Customer 360° has been generated - an integrated framework that addresses every point of the customer lifecycle of a business - from customer support to back office to customer analytics. What is Customer 360°? Customer 360º is a proprietary framework for integrated Customer Lifecycle Management (CLM) services that touch every point in the customer lifecycle of your business. Customer 360º integrates both direct and indirect interactions of a customer along the entire lifecycle from prospecting to acquisition to service to retention while also delivering insights through customer analytics. From a business point of view, this translates into reduced service costs, increased business and enhanced profitability. From a customer centric viewpoint, it translates into customer delight and enhanced customer satisfaction by catering to their current and future needs.


Customer 360° comprises of:
• • •

Customer Interaction services Back-Office services Customer Intelligence service

How will Customer 360º benefit your organization? Traditional delivery models address short-term business objectives like the need to attract new customers or provide support - which caters to a single customer touch point. This approach lacks a holistic view - in terms of customer experience across other touch points and insight into customer's needs and behavior. Customer 360º is an integrated solution that can ensure market adaptability, competitiveness and assured business.

5.4 Inbound Customer Marketing Research Report The world of targeted marketing is moving on apace. Organizations no longer rely just on direct mail to get their message across. The norm is fast becoming: multi-channel with the call centre, website, e-mail and SMS all joining the fray; multi-stage where a number of contact events are tracked prior to making the sale; and insight driven, where consumers are targeted based on their predicted behaviors or the occurrence of specific events in their lives.


Chapter 6
6.1 Banking on an Online Future These are the following opportunities and threats posed to retail banks by online banking. The development of online banking has proved a mixed blessing for retail banks. By allowing customers to service their accounts online, online banking represents a clear opportunity to reduce the costs of face-to-face banking. However, the study suggests that over a quarter of Internet users are now using online banking, the majority of customers are proving slow to take it up, and even those who do still demand the reassurance of one-to-one personal support, whether provided online or over the telephone. A survey underlines the fact that customers valued the personal touch, with 63% citing responsive service and being treated as a valued customer as the most important factor driving their overall satisfaction with their bank or other financial institution. The problem is that for most banks, providing the personal support that customers’ value so highly can rarely be justified. But at the same time bankers admit that the single biggest reason that customers didn’t effect was the inconvenience of changing banks. 6.2 Cost Trap It seems that banks are caught in a classic “cost trap”: Customers want detailed, one-to-one, personalized advice, yet neither they nor their financial providers are prepared to pay for it. In the past this circle was squared through the medium of an independent financial adviser (IFA), offering free advice in return for the opportunity to sell financial products on commission. However, the threat is pensions mis-selling have made many consumers wary of the motivation of the IFA, while the introduction of CAT standards for a number of financial products is cutting into the commission available to fund, “free” financial advice. “With the coming of CAT, the selling of financial products will have to be done on a simpler, more direct model,” says Dave Patel of financial software developers DPR Consulting: “You can’t have five layers of people taking 1% commission and then managing that product for the customer’s lifetime. A lot of the banks are interested in getting away from IFAs and owning the client directly.”


Banks’ motivation to move into the provision of advice will be as much about, customer retention as selling products – the challenge is to be able to do it cost-effectively. He believes that the answer is for banks to invest in online, self-service products which use knowledge management techniques to automate the provision of advice which is nevertheless personalised to the user. A suite of products should be created which can be tailored by banks to offer a detailed wealth check to their users. Users need to spend about 20 minutes entering their details, but in return they receive instant feedback, and by the end will have created an online portfolio from which they can continue to manage their affairs. A financial adviser probably has knowledge of no more than 100 products. It’s also more personal that one can say he does not want any IT investments, or that he only wants environment friendly funds. And the software will spot contradictions in his responses.” 6.3 The Rewards The payback for the bank is in the amount of information about customers the online check delivers - up to 300 items of information on employment, home ownership and so on. This approach is most applicable to the “mass affluent” customer with over £10,000 in liquid assets. Once implemented, online advice systems can be made available at no extra charge to less valuable customers, and also be used to underpin the personal advice given to customers with more complex affairs. With several retail banks, there seems to be a great deal of caution about creating more and more online capability. E-commerce generally has failed to live up to expectations, and the withdrawal of players like First-e from the market has made the prospect of Internet-only banking as distant as the paperless office. “There are lots of nice things you can do online, but you have to look at the costs and benefits,” says Angela Mackintosh, marketing director of “multi-channel” bank If.com. “It’s like the 1980s when people did all sorts of computerised stuff on the basis that you could do it, rather than that it was what the customer wanted.” Ms Mackintosh says that If.com took a conscious decision when it launched not to offer financial advice: “About 60-70% of our mortgage business comes from intermediaries, and obviously if a financial adviser introduces business then that creates the opportunity for them to speak face-to-face with the client. In the end the customer doesn’t pay anything for that advice. The product costs the same, but we do less advertising and pay the intermediaries what we would normally pay for acquiring customers through advertising.”


6.4 Understanding Your Customer Base However, the ability at any time to drop out of the website and contact a human being is seen, as equally important. The problem for direct operators is that they are heavily dependent on branding, and therefore cannot switch advertisement spendings into customer acquisition through intermediaries. And, like all players in e-commerce, they are discovering that the opening of new channels to the customer does not necessarily mean that old ones can be phased out. There is an assumption that people who are technophiles and who use the telephone and Internet a lot will do that across the board, but that’s not so. A lot of people are happy to do their banking online but for other things they want to see someone. A lot of the basic transactional customer calls are going onto the web or to SMS banking via mobile phone. 6.5 Cautious Future Expected Banks have indicated that while online advice is something that they are looking at in the medium term, in the absence of any strongly expressed customer demand, it is unlikely to be a priority. Either way the tradition of getting financial advice funded by the backdoor looks set to continue for some time. People are not prepared to pay the money but there is a balance between paying the money and spending the time. Ultimately the more affluent will pay for advice simply to free up their time.


Chapter 7
In the present uncertain economic climate, can banks and customers benefit from an actively managed relationship? Relationship banking and its effectiveness in today’s challenging economic circumstances. It is observed that despite serving the economy well, banks are generally focused on distribution at the expense of understanding the needs of their customers. The growing fears of recession may be reflected in how banks deal with their customers. It can be argued that a bank’s relationship with a customer is driven both by the current macroeconomic outlook and by the bank’s assessment of the impact of recession on the customer’s business. 7.1 Strong Power Base The “big” banks in India provide about 75% of domestic lending, and as such enjoy even greater power than their counterparts. 7.2 A Key Element In conclusion, relationship banking is the key to successful banking. The bank gains a better knowledge of the customer, the business and their needs. The customer enjoys a partnership with their bank, allowing both sides to manage issues in good times and bad. Despite technological advances and change, banking remains a people business, and the successful committed interaction of people is the foundation of true relationship banking.


Chapter 8
CRM is one of the primary initiatives in any industry and more so in financial industry sector, where competitive pressures from both financial and non-financial services are fueling the movement toward CRM as the companies are systematically raiding a bank’s territory to pick-off the most profitable customers. Thus, one has to begin with a financial institution’s strategic goals, develop a consistent technology platform that is scalable and support across delivery channels, train people at all levels and incorporate a customer-centric approach to every customer interaction. This article gives an overall picture of CRM with reference to financial service industry. Customer relationship management (CRM) is one of the primary strategic initiatives in industry today, regardless of whether the company serves retail or wholesale customers, whether it provides services or manufactured goods. In the financial industry, the movement towards CRM (also known as ERM for enterprise relationship management ) is being fueled by competitive pressures from both financial and non-financial services companies that are systematically raiding a bank’s territory to pick off most valuable customers. Although CRM is not a technology, modern high-tech applications, from relational databases, to data mining, to computer telephony integration (CTI), to Internet delivery channels, are providing the means to implement customer relationship strategies today. Estimates on the size of the CRM market vary, possibly because of the difficulty in defining CRM. International Data Group predicts the CRM market will grow from $1.9bn in1998 to $11 bn by 2003. AMR Research says the CRM market will grow from $2.3 bn in sales in 1998 to $ 16.8 bn in 2003. 8.1 Defining CRM One of the greatest problems with CRM is what it means. “The whole CRM concept means different people, depending on what they want to do,” says Jimmy Sawyers, consultant, Reynolds, Bone & Griesbeck, Memphis, TN. • Financial services that are transaction based, such as credit card companies or bill payment providers, want to manage the customer relationship to drive up transaction volumes and squeeze out expenses from individual transactions. One customer generally has one account and it doesn’t matter if others within the same household have accounts. The goal is to provide incentives that get the customer to use the service more. Transactions become commodities. The customer responds to price incentives and loyalty programs. There is almost no opportunity to cross-sell to the individual customer.


Consultative financial services, such as investment advisors and financial planners, use CRM to deepen the trust the customer has in the service provider in order to increase the fees for services. These companies earn fees regardless of the number of transactions the customer makes. They may be able to increase their fees base by cross-selling additional financial services to individuals, or obtaining additional relationships from the same household. Retail oriented financial institution defines CRM as a combination of the two extremes- managing the entire customer relationship in order to reduce costs and increase the depth of the relationship with the customer. Generally, reducing costs means getting the customer to use less expensive delivery channels. Increasing the customer relationship means either obtaining a larger “share of wallet,” or increasing the number of fee-based services the customer uses, or both.

8.2 The Evolution of CRM & The Challenges of Personalized E-Support Historically, customer relationship management has been the specialty of community banks. Bank management came from the community. Bankers knew their customers, their families, and their businesses. Lending decisions were based as much on good payment histories as on good standing in the community. Customers gave all their business to one bank, appreciating the good services they receive as a reward for their loyalty. As banks automated back-office functions with mainframes, and the number of products and services a bank offered grew, banks found it increasingly necessary to replace branchbased filing cards with a central information file (CIF). In early 1970s, CIFs in even the largest banks were centrally located file cards. But by the mid-to-late 1970s, these cardbased systems gave way to mainframe-based, hierarchical database systems.
8.3 Customer Support – A historical perspective The Customer is King. This mantra, although used for a long time, has not been put into practice until recently. Forget the ideology of royal treatment; customers were not even treated with dignity by most organizations. As recently as the 1970s and 80s, the concept of customer support meant that organizations were doing a favor by answering a few questions for the customer on the phone – after putting them on hold for an hour! Standing in line to buy something was common and expected. Remember when the customers had to go to the airports to buy tickets only because the airlines kept them there? Organizations simply lost touch with the realization – that they existed because of these customers. The 1990s brought two new concepts that challenged the prevailing business landscape: Deregulation and the Internet. These forces brought down the barriers of entry, resulting in an environment of intense competition. Stores faced competition from on-line start-ups. Traditional bricks-and-mortar banks fought for customers with online or virtual banks. Airline tickets were increasingly purchased from the convenience of your home. The explosion in


information allowed consumers to compare features, and prices across multiple providers. Products became commodities and prices could not be lowered further to ensure survival.

Customer service became the only major differentiator in many cases. Customers received what they have always deserved – respect. The customer was now truly the king. Business customers, although always treated with more respect than individual consumers, were more or less ignored in the early stages of the Internet boom. The emphasis focused on expanding the consumer base regardless of positive cash flow, revenues, and margins. The demise of many dot-coms brought an epiphany. Companies realized that they needed to focus on their enterprise customers. The advent of e-CRM applications was the first big step toward providing better support to the strategic business customers. Although these solutions provided automated self-service to customers, they still treated all customers the same. Furthermore, the focus of these applications is more on improving call-center productivity. Clearly, these applications add value and help many organizations execute their CRM initiatives. However, they are not effective in meeting the needs of an organization’s strategic enterprise customers. Each enterprise customer has its own needs and craves personalized support. 8.4 Evolution of Customer Relationship Management The genesis of CRM (Customer Relationship Management) lies in Sales Force Automation (SFA) tools. Companies like Siebel and Vantive (now part of PeopleSoft) took the early lead by introducing tools to help the sales personnel become more efficient in tracking their customers. There were also a few problem-tracking tools for help desk such as Remedy. As companies focused more on customer relationships, additional applications emerged in areas of customer support, field support, and marketing automation. Most CRM companies today are trying to address these four areas usually by partnering with other companies. Most of the ERP players are also expanding their solutions to include CRM. There are a number of niche players focused only on certain pieces of CRM such as e-mail management, sales force automation, technical support, marketing campaigns, among others. “CRM is a business strategy designed to optimize profitability, revenue, and customer satisfaction” – Gartner Group


Although there are quite a few vendors providing CRM related products and services, there is still a lot of confusion around the concept of CRM. CRM is not just an application or a technology that can be thrown at the customer satisfaction problem to make it go away. CRM, essentially, is a strategy that involves applications, processes, policies, business context, and people, to enable companies to manage and increase profitable relationships with their customers. An enterprise’s strategic customers expect top-notch treatment. They want the vendor to understand their needs. They want companies to build a strong relationship with them - on a 1-to1 basis. 8.5 Current CRM and E-support Environment There are currently over 200 CRM software vendors and the number continues to grow. Although, there are various types of applications included in CRM suites, as described earlier, the core application within the CRM landscape that truly builds customer relationships is the customer service application. Other pieces, though useful, are focused on helping the vendor rather than the customer. Many of these applications were initially focused on providing an environment to improve the productivity of call-centers. In addition, some of these applications integrated message queuing functionality to provide a common environment for all channels. So, whether the customer was trying to reach the call-center by making a call, via e-mail, by fax, or through the Web site, their query is prioritized and channeled through the same mechanism. Most customer service applications now provide Web-based self-service features for companies to offer their customers. Customers can look up their basic information like billing, order status, etcetera by logging in to the vendor’s Web site. While this solution works for a B2C model, for enterprise customers with hundreds of users and hundreds of products to support, this simply doesn’t work. Enterprise customers demand personalized support in order to access their information quickly and easily. In the era of information-glut, they want specific and relevant information. Companies are trying to manage relationships with their customers, partners, and suppliers in a personalized and automated manner. True personalization is not easy as each customer has its own needs and requirements. The issue is further complicated by the fact that these customers are in different vertical industries and also geographically dispersed making their requirements even more unique. 8.6 The challenges of personalized Enterprise E-Support While certain aspects of personalization are relatively easy – such as allowing customers to create their own preferences on the Web site – the process of providing only customer-specific information, especially to enterprise customers is challenging. These challenges include: • Relevant information: One major issue that most organizations face is finding information pertaining to each customer. Most often, this information is buried in disparate databases and extraction of relevant information at a customer level is a Herculean task. • Information Updates: As the information is constantly evolving, continuous updating for customers’ reference is required. In most cases, information is updated on an ad-hoc or periodic


basis resulting in delayed and inaccurate information and high overhead costs of updating the information. • Publishing of information: Since the information resides in various diversified functions within an enterprise, publishing of information is a major problem. Traditionally, publishing was restricted to certain IT professionals and business users who typically forward their documents to these IT groups for publishing on the Web. This approach is not only bureaucratic, and expensive but also excludes a wealth of tacit and explicit knowledge that never gets published due to lack of tools. • Personalized Applications: Some vendors offer personalized portals based on custom profiles created by users. Although these models work for the consumer level user, they do not provide value for enterprise customers. It puts the burden on users to define in what information is more relevant versus not. Business customers need an autonomous environment can all their users interface with the vendor enterprise and get the relevant information quickly • Communication: A relationship is based on two-way communication. Most esupport and relationship portal solutions are designed for enterprises to communicate to the user. A critical challenge is to enable a process where business customers are able to truly interact with the vendors, beyond the usual e-mail and phone options. • Security: Security continues to be a major issue for organizations especially for -based support. User authentication and management can be a nightmare for vendors trying to manage thousands of users coming from diverse locations. • Scalability: When hundreds and thousands of users try to get to the same information in a central database, scalability is a big issue. Response times get slower and systems can breakdown. Companies are trying to solve the scalability issue by throwing more and more powerful hardware at it. • Deployment: Deploying a CRM solution is a tough and lengthy process. Deploying a Webbased support system is even tougher. Furthermore, deployment in a personalized fashion focused just on enterprises, that can be a rat’s nest if not implemented carefully. 8.7 Overview – More than just E-Support As competition intensifies, organizations need to increase their focus on enterprise customer relationships. An urgent need exists for solutions that enable enterprises to manage relationships with their key customers on a personalized basis. Most of the current solutions fall short in providing a truly scalable model, where customers receive an autonomous and personalized environment for their support needs over the Web. Each customer gets their own personalized Weblet, with real-time information that pertains only to them. Customers are able to get specific and relevant information -quickly and easily - to resolve any problems or issues without going through numerous steps or phoning the call-center. Enterprises cut their costs by drastically reducing the number of calls into the call-center. Since these Weblets allow bi-directional communication, customers can give instant feedback to the enterprise. The solution is not just about providing support on the Web. It’s about managing relationships with key customers.


The following diagram shows how solution integrates disparate databases within the enterprise and provides targeted Web-based support to the business customers: patent-pending mediation technology provides a unique, innovative, and intuitive architecture that automates an enterprise’s collaborative ecosystem comprising of customers, partners, and suppliers. The solution enables companies to interface with multiple customers through a mediator, allowing them to deal with enterprise customers on a one-to-one basis, without creating separate processes. Organizations can achieve a return on investment of 20X of their up front licensing and implementation costs. The solution not only provides a major competitive differentiation, it also enhances an organization’s shareholder value.

Example of how CRM solution works Source: Maaya solution


Chapter 9

The Today's Events function displays a continuously updating list of companies who have recently released market information. Each company listed is then also hyper-linked to the latest relevant press release relating to that company. Although the opening page only lists those companies on which information has recently been released, it is also possible to list every company currently being tracked in order to get more information on what that company has been doing. This listing is updated each evening so as to keep you abreast of all the latest changes. The Screenshot below will provide a fuller example of how this looks:


source: financial editorial “ Money mantra”, 1999 Oct. ( Publication: vikas press)


Chapter 10
10.1 Ten Myths About the Customers To become customer centered and customer preferred, a firm must change its orientation and design its business capabilities, infrastructure, and measures of success from the outside-in by using the customers' perspective. There are several real issues to overcome to do that. The first is that a firm's current beliefs about its customers tend to drive its policies, decision making, and not only what its employees do with customers, but also what they don't do. This becomes so embedded that firms practice this without realizing it, and thus resulting in a great resistance to new ideas about customers when the old ideas are so heavily ingrained. The automobile company, for example, did not want to hear that customers were more interested in their coffee cup holders than other attributes of the vehicle. "We build cars for driving, not for drinking coffee" was a typical example of how a mindset about customers can filter out and resist hearing ideas or concepts that do not match prior conceptions about customers. 10.2 Retail Bank: Let's Ask the Customers At one of the largest, most successful banks in India, in a survey,there were in a quandary because tens of millions of rupees had been expended on telephone contact centers, yet the volume of calls was growing at such a rate that the capacity of that relatively new equipment would be exceeded in a year or so. "Who's going to tell him?" asked one executive, referring to their CEO. No one made eye contact. Some examined the ceiling tiles, while other execs scrutinized their feet, apparently concerned that some shoelaces might be loose and in need of tying. The silence grew heavy. Ultimately, as an outsider, I felt it was okay to fill the void and speak. "If a customer comes into your bank it costs X to handle the interaction, but if they call your contact center it reduces your cost by 90 percent?" well the answer is yes. Not many executives realised this aspect to serve customer at a lower cost. . "Thus volumes are growing, because the more you can change customer behavior by providing a desirable, less-costly access channel, the more profit you will make Eventually all companies want customer contact to be conducted at low-cost channels, rather than via highcost brick-and-mortar branches". A customer vision has to be developed, outside-in, of an ideal bank and of the ideal customer experiences during touch-point interactions with a bank's telephone contact center. One element of this vision is what the customers' view of how the bank could provide greater benefit to them by contacting them at home (under certain circumstances, which the customers would highly value). Besides, how an offer of a product during a service conversation (cross-sell) would be feasible.


Securing an actionable, outside-in vision of business from a customer can enable it to stay up with newly emerging needs and wants and to overcome the myths that currently have an impact on the organization’s effectiveness. Ten common myths about your customers. Myth 1: Customers want the lowest price—period. A powerful concept to remember is that a product or service offering is rarely a commodity that can only be differentiated by price. The fact is that the savvy business can differentiate even a roll of steel, arguably one of the most rock-solid examples of a commodity. The traditional way to compete with a commodity is to lower your cost of manufacturing, and then lower the price to drive additional sales and "make it up on volume." Consider how to attract and retain customers on a value proposition other than price: The value-added expert advices that can be given to help the customer better use that product. In many cases these can be leveraged to provide great value to differentiate a firm or product and can often warrant a higher price, although the competitors offer a lower price. Myth 2: We know what our customers want (or don't want). Perhaps the greatest inhibitor to go beyond "Have a nice day" service platitudes is the belief within a firm that its prior history and years of experience result in perfect knowledge of what customers want and do not want. Virtually every firm at one time has felt it could skip the development of requirements via "customer visioning" and go straight to implementation of new processes and channels for customers. After all, the firm has been in that business for (number of decades here) and no one knows their customers better than they do. There is, in fact, someone else who better knows what the customer wants—the customer! In order to develop an ideal, customer-defined future vision of the firm, there is no other substitute. That does not mean that the company has no valuable information at all. Front-line, customerfacing personnel can be a valuable source of information regarding the performance of current processes, channels, and product or service offerings. Customer complaints and customer service contacts provide excellent feedback on what's not working. The important thing in those cases, however, is that the information still come directly from the customer, not from one’s intuition due to years of "being in the business." However, over time it can become less clear which of your beliefs regarding customers is actual, literal customer feedback versus intuitive beliefs formed and reformed over the years. The result can be a strongly held set of beliefs, such as those of the bank contact center, that are rigidly driving the wrong actions. Even if known once, exactly what customers wanted, in the current environment of rapidly rising service levels, such desires are fast-changing and if one has no formal vehicles to monitor these, then do not know them. Finally, while front-line employees may know what customers like or dislike about current products and services, they often lack the ability to place themselves in the customer's position to envision creative new offerings and interactions that would appeal to deeply hidden or newly emerging customer value systems. By probing directly with the customers why they want things—and understanding how customers get value/benefit from the things


they want—it is possible to jointly envision and develop creative, new breakthrough ideas, which brings us to the next customer myth. Myth 3: Customers cannot envision what does not exist; focus groups are a waste of money and, besides, no Sony customer ever envisioned the Walkman. This wonderful myth is born from many firms expending great sums on research, and sitting for hours behind one-way mirrors watching ineffective focus groups that yield little of value. Anything, done the wrong way, can be disappointing and ineffective, including focus groups. It may be true that engineers, not customers, envisioned the Sony WalkMan. Probably no customer spontaneously may have said, "Eureka, I want to take my big console radio and strap it to my head for music while I am out jogging—if only engineers could reduce the size of the components and then come up with cool-looking headphones." But that is not because customers lack the capability to envision things that do not exist. Rather, it is because market research techniques often do not generate a line of thinking that breaks the person out of using only currently available and existing things to develop their vision. With such approaches, Sony could have arrived at the same idea, probably earlier, and from a customer. And with such approaches, any business can. Myth 4: Customers do not want to be telephoned at home—always. As the banking client learned, it is unwise to project one’s own personal prejudices, likes, and dislikes onto the customers. In fact, customers in visioning workshops for many different industries have stated that the primary problem with being contacted at home is that it is almost always by a blanket marketing program and not targeted to their specific interests. Customers hate to be contacted when the call has nothing uniquely to do with them, but is merely part of a mass-marketing campaign: "Don't call me about your great special on boat insurance if I don't own a boat!" However, if a customer owns a particular investment product and something happens that could impact them personally—perhaps new legislation that could have tax implications— they would actually appreciate receiving a targeted, personalized, individual-specific contact. "Except during the dinner hour. Always." Myth 5: Customers do not want to be sold to, when they telephone for service. This is a common misconception resulting in missed opportunities in all industries to provide great customer value during touch-point interactions. As with all these items, there is both opportunity and risk involved. The risk with this one is twofold: First, never try to sell a customer something until you have handled—to their satisfaction—whatever the issue was for which they originally called. Second, never make a generalized, mass-market, blanket offer. The opportunity here is reciprocal: After the customer's issue has been addressed, it is almost always appropriate to make them an offer as long as it is tailored and targeted to their personal interests and values. "Mr. Thompson, I'm glad we could resolve that for you. Before we end our discussion, I see that you are an avid golfer (perhaps Thompson used his credit card to charge a set of clubs or a golf cart rental). As you may know, our travel service department has a special offer for two nights at the


Hilton in Myrtle Beach, with free golf, for only $99.00 next weekend. Would you be interested?" Myth 6: Customers do not want to give us information about themselves. In today's world there are well-publicized and growing public concerns regarding the use of personal information. These include, but are certainly not limited to, real issues of invasion of privacy, breach of confidentiality, identity theft, and plain old irritation at being contacted by someone who has obtained one's phone number, postal address, or Internet address. However, customers also place a high value on the benefits and value they can receive (see Myths 4 and 5 above) from targeted, individualized, and customer-specific interactions. For example, the term tailored and personalized crept into their vocabulary by the late 1990s. During the early 2000s, personalization moved from a distant rumble of occasional customer delight to a roar of expectations. And to receive the benefits of targeted, personalized products and services customers must now enable their vendor with relevant data about themselves. In return, the firm must secure the data (with controlled, employee-only, and role-appropriate access) and then use it only for the purposes for which it was provided. With these assurances, and some well-earned trust in your brand, customers will share information with you. This is a highly volatile and critical issue that represents both opportunity and risk to the extreme. Personalized interactions can literally become your most powerful loyalty generator, but if you misuse customer information and lose their trust, you can lose not only your customers, but also your market Myth 7: Customers who call hate to be transferred. While this statement appears to be intuitively correct, the reality is actually counter-intuitive and it depends on why they are calling. If a customer contacts for general information regarding your business, products, prices, and so on, they may well expect to get an answer from their first point of contact. However, if they want expert advice, they do not expect the first person who answers incoming calls to also be an expert in all things. In this case, a transfer of their call can actually reassure them they are going to the "right" person who has the expertise. However, that should occur with no more than one transfer. Myth 8: An apology is never enough (so we don't do it). A common myth that drives the behavior of customer-facing employees is: Our customers don't want an apology; they only want some form of personal compensation or concession for mistakes. In many businesses that myth is not only accepted, culturally, but it is an actual business practice to never admit or take responsibility, for fear it would only encourage the customer to feel aggrieved and would somehow later be held against them. This is almost universally incorrect. In fact, customers repeatedly say that the most powerful thing a firm can do after an error is to admit it—and apologize. However, in order to have the greatest effect, the apology should also be accompanied by assurance that action has been taken to insure the error will not occur again. For example, an apology during the customer interaction, followed by a letter from management that the reason for the mistake has been determined and that corrective measures are now in place, can actually increase loyalty. Customers are often delighted with how a firm responds to and corrects a mistake. Customer


defections in those instances were actually less than the defection rate of customers who had experienced no problems at all. Myth 9: Our customers and their needs are unique. Another common misconception is that customer needs for a given firm, industry, or geography are unique and quite different from those of other firms, industries, or geographies. Virtually everyone needs responsive service, and easy, timely access to their vendors, irrespective of industry.2 However, the customers of a stock brokerage will place a higher priority on quick and easy access to placing their orders than customers of a locomotive manufacturer. The customers of an accountant will more greatly demand precision than customers of a hair stylist, although it is a need shared by both. Within an industry, customer segments will tend to have similar needs but different priorities, e.g., financial services where older people value safety over growth and younger ones tend to prefer taking risks in order to attain growth. Both groups need growth and safety, but to attract and retain each of them requires a dramatically different offering by the industry. Beyond the prioritization or importance weighting differences, we also find that approximately 30 percent or so of the actual customer needs are often unique to a specific industry or customer set. What is important here is: • A firm can begin its customer journey and focus on some basic needs that are relatively common to all customers (and which I will share with you in the next chapter). • Once the firm can "walk" and provide such basic loyalty-driving needs, it can progress to "run," via market research to determine the 30 percent or so of unique needs and any prioritization differences that may be necessary to attract and retain segments. • However, it is dangerous to then assume that when a business model is successful for one customer set that it can be cloned as "our standard set of corporate processes" and will work around the world. It's that 30 percent of variability that can still kill the business. Myth 10: We know what our customers need (not want . . . need). This myth or misunderstanding is tightly linked to discussions that firms founded on their own internal expertise and product knowledge often continue to believe that, due to their product expertise, they are the experts on what customers need. This is quite different from the issue of what customers want. It assumes that product expertise equates to also knowing what is best for the customer. In fact, firms with extreme product competence may be even less likely than others to know the (changing) needs of their customers. These firms are also the ones less likely to have processes and competencies for listening, understanding, and responding to customers in a rapidly changing environment. Beyond that, even the companies that listen to what customers want almost always lack the insight required to know and fully leverage what the customer actually needs and would most value. This is because only the customer completely understands how they get value or benefit from something they want, and that underlying benefit is why they NEED it. Understanding what they want is good. Understanding why they need it is critical to creatively develop new products and services to better meet those needs. And that is why the customers, not only the company, must be included in creative visioning of needs-based, future products and services (see Chapter 9, "What They Need: Customer Visioneering").


Exercise: You Are the Customer What about when you are the customer? Do you always search out the lowest price? And do you always then purchase from that lowcost provider? Always? If not, when have you bought something and known a similar item was available elsewhere and cheaper? Why? What was it that you valued greater than price? Have you ever been contacted by phone, at home, and actually appreciated the call? Why? What was it that you valued greater than being undisturbed? Have you ever received an offer or proposal, although you originally initiated the contact on a different subject, and appreciated it? Why? What makes it okay in your mind, even great, to be offered something (such as a product or service)? When you contact a business, do you expect the first person that answers the phone to be able to answer questions or handle issues on any topic? Why or why not? If you need advice on a complex matter such as investment products, do you expect to be transferred to reach an expert on that subject? If you were not transferred to someone who specialized in such a topic, would you be comfortable with and trust the answers you get? Do you think the above is true only for financial issues, advice, and counsel? Or is it also true for other businesses—such as yours? For example, how secure are you that a salesperson can also give you accurate technical advice about the electronics under the hood of your new ZOT 12? Would you be happy if a single transfer could get you from the salesperson to the right technically knowledgeable person? What if a business made a major mistake with your account? Would it be important to you that they apologized? What if they did not? What if they would not even admit to the error? Can a vendor best envision new products or services to meet your unexpressed future needs, or would you need to apply your knowledge of why you need things and how you could get the greatest benefit or value? For example, can you envision teaming with a vendor and discussing why you want what you want and then together envisioning new ways they could better provide that benefit? Could a firm that offers this steal away your business? • What about your customers? • Would they answer the above very differently? • Are you treating them differently?


What Customers Want
10.3 Five "Doing-Areas" We can categorize what customers want to do on the Web under five "doing areas," as follows: 1. Evaluate competing businesses and products. 2. Select products and transact with e-service providers. 3. Get help. 4. Provide feedback. 5. Stay tuned in as e-customers. These five areas are all important. Customers will operate in one area more than another at a given point in time, depending on where they are at with what they're trying to do. We can think of the five areas as a rough progression, from evaluating businesses and products to becoming customers to receiving after-sales support and information 1. EVALUATE COMPETING BUSINESS AND PRODUCTS Customers have to decide between businesses and products. Web sites are a part of that decision-making process. When deciding among businesses, customers will either actively or passively get information from a company's Web site. Customers want to make sure they like a company enough to do business with them. Customers are more likely to actively search for, and evaluate, information on a company when they are new to the market for a product. They're likely to look at parts of the site that give them an idea of what the company is up to. Customers who already have dealings with a business are less likely to actively seek out their general company information. However, they may actively seek out information on a particular incident or company activity if it affects their preference for that company. Potential and existing customers will get a feel for a company just by being on its Web site. How customer-centric the site feels will give them an idea of the quality of the customer service they can expect. How well the company has used technology will give customers an idea of how switched on it is. Of course, a company must be the type a customer is looking for, and must offer the type of products a customer wants. The search for, and evaluation of, product information is key for new and existing customers. Customers will evaluate different products offered by one company and by different companies. Sometimes that evaluation will result in a sale (either online or offline) and sometimes it won't, but it is all critical to the decision-making process. Customers may also evaluate product information available in other forms, like brochures, as part of their decision-making process. The importance of being able to find useful product information has been reinforced in GVU's tenth user survey. The survey showed that the provision of quality information is the most important attribute of a vendor's site. In addition, the greatest cause for customers to leave a site is not being able to find the information they were looking for. 53

Customers' evaluation of product information is not about passively viewing product blurbs. Customers seek out product information and interact with Web sites, and a business, to find out what suits them best. Customers are quick to use any sort of useful interactivity to get a better view of what a product offers them, how much that will cost, and how easily they can get it. The more usefully interactive product information is, the more the customer will use it. Mortgage calculators provide a good example of useful interactivity. Customers enter the amount of the desired loan, and the various features they require, to find out how much it will cost them, over a certain loan period. By changing the variables and running the process a few times, customers get a good idea of what they're in for. Customers will provide information on themselves to get an intelligent response. This can take many forms, not just strictly mathematical as in the mortgage calculator example. They will enter information to get a personalized response. And they want as much help doing that as possible. They want to compare the various scenarios they've generated and the responses they've got, and they may do that right then and there on the Web site or come back a few times to try things out. Customers will take time out to evaluate products. The more useful the information, the more likely they are to spend time evaluating them. If product information is not useful, chances are customers will abandon your Web site for someone else's. The tenth GVU user survey showed that Web users can spend up to half an hour looking for the information they want. Sometimes, you can't tell customers everything they need to make a decision. In these cases they will ask you questions or request more information. Or customers may not be able to locate the information they need, and they'll come straight to you and ask for it. At this point, customers are pretty single-minded, and they're unlikely to give you a whole lot of background information when asking questions. This can make it difficult to direct and respond to customer questions. You can lead customers to ask more meaningful questions, if you give them some simple selections to make when entering their comments. In fact, sometimes this makes inquiries easier for customers. 2. SELECT PRODUCTS AND TRANSACT WITH E-SERVICE PROVIDERS Customers are faced with a lot of choices when they go to a Web site. They will make selections to personalize their experience and the services and products they receive. That selection will comprise the choices they make to get around your site and identification of the things that they want or that particularly interest them. This may involve choosing a particular product there and then or setting themselves up to receive information and services later. And sometimes, that selection will lead to a transaction. This transaction may or may not be financial. When customers transact with you, they give you something in return for a service. Sometimes that is simply information, for example, when they register to receive particular information online.


Customers have to select the path they take through your site as much as the particular services and products they want. They are using your Web site to create a context that is relevant to them personally. Selection, then, is the process of personalization. When making their selections, customers rely heavily on tools to seek out personally relevant information, such as site maps, search functions, indexes, and shortcuts. They also use tools that help them receive personally relevant information and services, such as entering personal information to create profiles and receive personalized content. Personalization is an all or nothing proposition. Personalization should allow e-customers to modify the information and functionality they receive on Web sites, based on facts related to their own particular situation. E-customers will find Web sites irrelevant and intrusive if they do not receive something personally relevant and useful in return for the information they have provided. E-customers are more likely to provide personal information on Web sites that clearly offer valuable and useful information and functionality in return for the information they have provided. 3.GET HELP Customers may seek help at different times, as part of their evaluation process or after they have made a selection and transacted. Customers will also seek out help on different levels: getting around the site, evaluating what is best for them, and getting the best out of something, and solving a particular problem. Customers will interact with your site to: • Work out how to use your site. Customers want to learn how to get around and optimize the use of your site as quickly and easily as possible. • Find out how something works once they have it. • Resolve a problem online. • Find out where to go, or whom to talk to, if they have a problem that can't be easily resolved online. And don't forget, a Web site is only part of a customer's experience. Customers may also seek help outside of your Web site. Tailored advice is still very important and, oftentimes, this only comes from talking to someone. 4. PROVIDE FEEDBACK Customers will provide feedback. This may be voluntarily provided by e-customers (unprompted) or solicited (prompted). Customers sometimes want to provide feedback on an experience they've had with you, either on your Web site, or in general. A Web site provides a medium where people can have a good moan without having to talk to someone in person. Customers will complain and unprompted feedback is usually negative, unfortunately and fortunately. It's unfortunate because it can create a skewed view of how well you are doing


and fortunate because it provides an outlet that customers may not otherwise have. It also gives you a chance to get things right where you may not have otherwise known something was wrong. Feedback on your Web site may not be particularly helpful, because customers don't understand the way your Web site works as well as you do. "Your Web site stinks" might be all the feedback you get after a customer has spent half an hour unsuccessfully trying to do something useful. You may never find out what the customer was trying to do or exactly what went wrong. However, if you prompt feedback in places related to specific things you know customers are trying to do, and give them some guidance on what you want to know, you're more likely to get useful feedback. Customers are more passive when it comes to prompted feedback. However, customers will give you information, provided they get something worthwhile in return. A customer who is very involved with your company or your product may want to have some involvement with the decisions your company makes. Those customers still need to see payback for time spent. This payback does not equate to a bribe either. Seeing the difference the feedback makes may be enough for a customer. 5. STAY TUNED IN AS E-CUSTOMERS The level of day-to-day involvement e-customers have with businesses as e-service providers will determine how much they want to "tune in" to their Web site. For example, a bank's customer is more likely to want to use a Web site for frequent transactions than a computer supplier's customer who may only purchase once a year. Even if customers are not transacting with you on a frequent basis, they will still use your Web site to: • Access and maintain any information they've given you or that you share as a result of your service relationship. • Be sure they've gotten the best deal you can provide. • Access special deals or offers. • Get the most out of the product they've purchased. And, again, let's not forget that a Web site is only part of a customer's service experience. Customers may have relationships with people within the service-providing organization, and these are also an integral part of day-to-day support. 10.4 Seventeen Customer Directives- evolution of E- CRM When we get in the way of what customers want to do on the Web, they get frustrated. What they want to do will comprise getting around a site and making use of the content and functionality it offers. There are some complaints, or requests, in relation to a whole range of Web sites and industries. Customers don't know all the marketing and business reasons behind the way a business has done things, they just know what they want it to do, and they'll state it in simple terms they understand.


However it does not imply that customers will be equally frustrated by all these blunders. They will be most frustrated by what gets in the way of the things they want to do the most (and this will change depending on where the customer is at). Also, customers will take the Web site on balance. If they are provided with some very useful things, they may put up with some blunders and learn how to get around them (but that's not an excuse for making the blunder). The following customer directives will give some triggers for thinking about all of the factors that contribute to a frustrating customer experience, the thinking and planning that goes into a site, the content that ends up there, the visual interface and interactive functionality, and the performance of the system in general. All of these dynamics will be explored in depth in this book, and these customer directives will set a frame of reference for later. If businesses and Web site designers are aware of what frustrates customers they will be more likely to direct their energy into areas most likely to result in customer effectiveness. 1. It should Be Worth the Wait Everything we offer on the Web is subject to higher expectations because customers have to wait for it. On the Internet we have to wait for things to download; that's a given. Slow download speed is still rated by customers as the biggest negative in their experience of the Web, but they live with it. Customers get mad when they wait for a page to download and then find there's very little on it. Sometimes it's just obvious that that part of the site is under construction. Customers feel that companies should make the effort to complete each page before offering it online. Under construction This doesn't necessarily mean that a business should refrain from presenting a page that is "under construction," but it does need to be handled appropriately. Customers will feel cheated if they spend time following a path only to find their ultimate destination under construction. Dead ends It is surprising the number of times a customer comes to a "dead end" on a Web site, a point where no new content is delivered. This is especially true of Web sites where a standard navigation (such as frames) has been used across all product content. A page should not be offered if there is no new content available on it. Multiplicity Another common frustration is taking one path to find information and then taking another, only to find yourself receiving exactly the same information. Customers expect different paths to reflect different customer needs, and they get annoyed when they find the same information having taken different paths. This is particularly problematic in relation to calculative or scenario-based functionality, where the customer sees quite different variables and considerations leading to exactly the same outcome. If the outcome is the same for all the


different variables, why would a customer bother going through the process of generating scenarios always to end up at the same place? Gratuitous content and functionality Download time also makes customers more sensitive to time wasting. Customers will see anything that doesn't exist for a reason as gratuitous. This does-n't mean they don't want graphics or other interesting and creative devices on Web sites; they just want these things to be a worthwhile part of the journey, and, therefore, worth the wait. Blunders Navigation leading to nothing Say a Web site offers "tips from other customers" as part of the standard navigation for evaluating products. However, only one in five products actually has customer tips associated. When the customer clicks on "customer tips," chances are, there won't be any. This will get annoying after a while. The level of annoyance would be even greater if it was something fundamental, like product prices, that was sporadically available. Worthless downloads Consider a company who has run a series of TV ads and has decided to profile those ads on their Web site. Customers can click on a picture of a screen shot from each of the TV ads and this starts a download. The download takes about five minutes. Customers who complete the download find it to be a reproduction of the TV ad, nothing more, nothing less. They wonder why they bothered taking the time to see something they've already seen on TV. After all, TV is a better medium for the ad anyway. They expect the Web site to give them more information, to complement the ads, not just reproduce them. 2. What Customers Get If They Do This Web sites can't show everything all on one level. It's just physically impossible. We have to put different information on different levels and give customers paths to navigate their way through it. Customers need to make an informed decision of whether or not it is worth their while to head down a particular path or partake in a particular process. The more we can tell customers about the consequences of their actions, the better. And "telling" a customer what's going to happen, or is happening, will involve written and visual cues.

Blind action and hidden consequences Unfortunately, we often don't make a certain path clear to customers and they don't know what they're committing to when taking a certain action. The result of an action isn't always clear. This means that customers will not try the action or will try it and be disappointed or confused.


This is particularly problematic when customers become eligible for something as a result of a transaction, but don't know exactly what that is until after the transaction. This might result in customer delight if they are eligible for more than they expect, but, chances are, they'll be disappointed. Also, when customers are considering whether or not to purchase online, they want to know what the process is and need help every step of the way (including confirmation of a successful purchase at the end of the process). Customers often feel uncertain about what's happening to them if they don't understand the steps they're going through. This lack of understanding sometimes results in fear, and this will prevent some customers from purchasing online.

Hidden time requirements Some processes take up a lot of customer time, but the customer doesn't know that up front. Customers don't mind investing a bit of time if the payback is good, but they get angry when things unexpectedly pop up along the way. Downloads are particularly problematic because of the time taken to complete them. Many customers also aren't comfortable with performing downloads; they feel they don't know enough about what's going on. Some customers will venture a download, but they need to know exactly what's involved up front and receive help along the way. Blunders Blind registration A researcher comes to a Web site to find out about a particular piece of research they know has been completed by a research organization. They are not a client, as such, but are prepared to register and pay for the research if necessary. On coming to the Web site the researcher finds that the information they want is not publicly available. The Web site does, however, offer registration. There are two types of registration, one for clients and one for a complimentary account. There is no explanation of what the registration processes will offer. Irrespective of this, the researcher is willing to register for a complimentary account, because they expect it to give them access to the piece of research they're looking for. The researcher goes through four screens to complete the registration process. (It would have been five or six if someone else had chosen the same username or password as they did.) On completing the registration process, it finally becomes clear to the researcher what they are eligible for. It turns out that they can access the research they want, but they can't access the full transcript without client access.


The researcher now has to go back and find out what is required to qualify for client access. They are perturbed that they didn't know, up front, what they had to do to get the information they wanted. Let's hope the research, if they can actually get hold of it, is worth all this hassle. The sequence the researcher goes through is shown in Figure 2-1.

Figure 2-1


3. Blind Registration Sometimes customers want to be anonymous and sometimes they want you to know exactly who they are. Customers use their anonymity as a basis for getting impartial advice and information without any sales pressure. This tends to be early in the process when a customer is evaluating alternatives. The importance of anonymity is reinforced in GVU's tenth user survey, where people agreed strongly with the statement that they valued their anonymity on the Internet and enjoyed online shopping because of the absence of sales pressure. Figure 2-1 Blind registration. However, if customers want to transact with you, and if they have a history with you, they may well want you to know who they are. This is likely to be later in the process when identification benefits the customer. Problems arise when we misjudge when people want to be anonymous and when they want to be identified. Forcing customers to identify themselves too early in an inquiry process could prevent them from going through with it. Additionally, Web sites sometimes don't make it clear whether customers are anonymous or not. Customers can sometimes incorrectly surmise that they have been identified, and then get disappointed when they don't receive personalized information. 4. Customers have to use what is generally given If you ask customers for information, they expect you to use it in some way. This applies to information that returns a response then and there, as well as later on. If customers are using functionality, such as a calculator, or a drop-down menu, to create outcomes from different scenarios or selections, they expect the information they enter to directly affect the outcome. Customers get frustrated when they enter information and it doesn't change the outcome. Similarly, if customers give you information about themselves during their Web-site experience, and then you don't use it for anything useful to them, they wonder why you needed it in the first place. In addition, customers expect Web sites to remember things so they don't have to tell you the same thing over and over. This is particularly true when customers transact-if they seek to do a number of transactions sequentially, and they give you personal information the first time, they expect you to remember it, to save them from reeking it each time. Blunders Go-nowhere selection A customer wants to find out the cost of a phone call to, say, part of the United States. They find a calculator that allows them to enter where they're calling, and when, to find out the cost of the call. The calculator returns the cost of the call, and also presents a drop-down list from which the customer can select the time at various places called. The customer would have to select the exact place they are calling from the drop-down list to find out the time there. The customer is confused as to why the tool couldn't tell them the time at the place they were calling at the same time as telling them the cost of the call-they had already provided information on where they were calling.


Insufficient memory A customer wants to buy a mobile phone. They go through some scenarios on the Web site to work out what they need. The Web site recommends a particular type of mobile phone and the customer decides to get it. The customer clicks through to purchase the product but finds that the form needs some information identical to what they've already entered. OK so maybe they can live with that. They then fill out the form to purchase the product. They then realize that they also need to sign up for the call plan that goes along with the mobile phone. Having ordered the mobile phone, they go on to sign up for the call plan they want. They get a form to sign up and discover that a lot of the information they just filled in on the previous mobile phone form hasn't been captured in this form either, and they have to rekey it. By this time the customer is getting a little frustrated and is thinking, "This could have been easier." The customer submits the form to sign up for the call plan but they get an error message telling them that they haven't filled the form in correctly. They go back to fix the form but find that some of the information they filled in the last time has disappeared. Now the customer is really annoyed. If the error messages or the forms aren't very helpful as well, this customer could end up going back and forth a number of times to rekey, rekey, and rekey. Chances are that this will be the last time they try and order something on that Web site. The sequence the customer goes through is shown in Figure 2-2.


Figure 2-2 Insufficient memory. 5. Customers expect to be given more Because Web sites are not the only medium that customers have to find out about companies and their products, they expect Web sites to "make sense" in relation to all of the dealings and exposure they have with a company. Customers expect businesses to tell them more than what they already know, not repeat everything they've already been told without offering anything new. It also sticks out like a sore thumb when known parts of the business or product offerings are obviously excluded from the Web site. If customers already know your company, they expect to be able to learn more. Of course, this directive is largely to do with integration; integrated marketing and customer service. And this is something we will explore in more detail later in this book.


Blunders Incomplete offering Consider a telecommunications company that offers connectivity to the Internet through an ISP (Internet Service Provider). A customer goes to the company's Web site to find out about its ISP's rates relative to their current ISP. But, mysteriously the company's Web site makes no mention of its ISP. The customer is baffled and confused as to why such a relevant service would be missing from the Web site. They then find out, in "other links," that the ISP has a separate Web site, so they go there. But, they still can't understand why there are two Web sites. Both sites may represent two companies, but they're all part of the same service as far as the customer is concerned. Insufficient interactivity A customer who is evaluating different mortgage options goes to the Web site of a financial services provider. The customer has already gathered information from a few other Web sites and is hoping to be able to decide among them. However, when the customer gets to this particular Web site they find the available information to be nothing more than what they already have in the provider's brochures. The Web site does not provide the customer with information relevant to their particular situation. Chances are that this company will not win the sale as the customer moves on to check out the next Web site. 6. Customers make Comparison Customers evaluate products and services against each other; those products may be offered by one company or across companies. Customers also want to compare the value of the different information offerings on your Web site. Inconsistent product information Customers get frustrated when product information is presented in such a way that it makes a valid comparison difficult. Lack of consistency in how product information is presented makes comparison difficult for customers, and that relates to consistency in visual presentation and access as well as it does to the nature of the content that's provided. Ignoring relativity Customers also struggle when Web sites ignore obvious relationships between products they are evaluating. Some products are obviously related, or maybe even packaged, by the service provider, and yet the customer finds that the Web site does not relate those products at all through content or even basic navigation. Blunders Difficult product comparisons Consider a customer who wants to select a day-to-day checking account. On visiting a site they find information on a range of checking accounts. The customer starts off with a list of the accounts available and clicks through to evaluate the first one. Having evaluated the first one, the customer has to go back in order to click through to evaluate the second one, and so on for the seven checking accounts available-forward and back seven times. But then the customer realizes that the last three accounts are actually complementary to the checking accounts; they detail the different ATM and card options. The customer then has to work out which of the previous four checking accounts these three options relate to. It would have been helpful to evaluate those options at the same time as evaluating the checking


account, not to mention being able to get between products without having to go forward and back all the time. Company structure versus product comparison A customer of a global management consulting company receives good consultancy advice on a project and wants to find out what other areas the company could assist with. The customer goes to the consulting company's Web site and clicks through on "products and services" to get a list of broad service areas. However, none of those services can be clicked on for more information. The customer then goes back to the home page and realizes that this is an international home page and that they will need to select a country-specific Web site in order to get information on services. Given that this customer is in the United States, they select the U.S. Web site. Now they click through on "products and services" and get a list as long as your arm; the list appears to detail every service and sub-service available, plus a lot of other items that don't even look like products and services. The customer starts to go through the list, clicking on the ones that look interesting. However, the customer finds that each click returns a new Web site-one for every service (each with its own home page). Each of these Web sites is completely different and each seems to be more of a brag book for a subsidiary company or department than a guide to products and services. Needless to say, evaluating services on the Web site would be a labor of love. The customer decides it's probably quicker and easier just to call the head consultant on the project already completed to find out what other areas the company may be able help with. The sequence the customer goes through is shown in Figure 2-3.


7. Customers make Decision by analyzing the Facts Customers are likely to feel like they're being subjected to a hard sell if they do not have sufficient information before being faced with a decision or an invitation to purchase. There will be some fundamental information that a customer wants before deciding whether to purchase. The nature of these fundamentals will depend on the service being offered. Blunders Inappropriate timing Consider a customer who is evaluating products offered by an electronics company. The customer interacts with a tool that helps them identify some solutions to common desktop publishing problems. By identifying with some problem scenarios, the customer receives some recommendations; a list of software and hardware products with a brief description of each product. Next to each product name is a button inviting the customer to "buy now." The customer feels uncomfortable with the process at this point because they don't feel they know enough about any of the products to purchase anything at that point. Missing facts Continuing the above scenario, the customer chooses to ignore the inappropriate invitation to "buy now" and clicks through to the product page for one of the recommended products, a printer. From the product page the customer clicks through to a page that allows them to choose the printer model. Here they are again invited to "buy now," but unfortunately no prices are given for the different printers, probably because each printer must be packaged with software, thus making each combination a different price. The customer feels they can't possibly purchase a printer without knowing how much it is going to cost, and they bail out of the process at that point. 8. Customers want business to know their Needs Customers make brilliant and smart use of the Web, only to find them ambivalent toward it (or, when too much liberty is seen to be taken; disdainful. Everyone is limited in their knowledge of the customers, one way or another. The better we know our customers, the more we can directly address their needs. But sometimes we need to remind ourselves of the obvious because lots of Web sites just aren't getting this right. One be very careful assuming you know what customers need-what they need to know or what they need to get. Remember that their use of a Web site is only part of their whole experience, and what you know from a customer's Web site behavior may not tell you enough to second-guess what makes them tick. Personalization Many Web sites invite customers to personalize content and functionality for their own uses. Creating a home page has become quite a common concept-and maybe that's part of the problem. People take an idea that may have worked on another site and apply it to their own, without realizing the fundamentals of what it takes to make it successful. To work well, personalization is dependent on what's being personalized. Personalized irrelevance is never going to be relevant. Customers just can't be bothered with the process of personalization unless they get something that's useful to them. And, of course, the process has to be user-friendly as well. Customers do not want to go through a painful process to create something that may not end up being useful to them.


Recommendations Many Web sites also make recommendations to customers. Customers may find these useful, be ambivalent, or find them a waste of time and space. Why? Because, to state the obvious again, the better we know our customers, the more we can directly address their needs. And sometimes we don't know them as well as we think we do. So we can make recommendations on what we know we know, and find out what we don't know, before making recommendations. For example, we do know what a customer has done on our Web site (well, we should). If we base our recommendations on a good dose of Web site behavior, then we might have a better chance of being useful. Also, if we ask customers to select the things that they find important, or identify with, before we start making recommendations, we will also have a better chance of being useful. In general, if customers' needs are not well understood, it is better to provide customers with adequate, quality information and leave it up to them to make their own decisions, rather than take the liberty of second-guessing their needs. Decision support Customers want to find out which product or service is best for them, and some Web sites will offer content and/or functionality to help them make the best choice. That's fine, but sometimes this help is couched as "customized solutions"-generating solutions on the basis of customer needs. This type of decision support is an all-or-nothing proposition to the customer who would say, "Either make a recommendation based on adequate knowledge or don't bother making a recommendation." Hopefully, this directive will become less needed over time as we utilize the Web to better understand our customers. In the meantime, care needs to be taken not to make the worst of a good idea. Blunders Ill-informed solutions A business customer wants to evaluate the types of advertising and promotion they should be engaging in. The customer goes to one of their favorite Web sites, which has a center just for small businesses. The Web site says that it can offer helpful advice and solutions to small businesses. The customer finds a section on advertising and promotion right away-it's obviously a hot topic for small businesses that have tight budgets and need focused results. The customer is given three areas of selection: type of business you are in, what you are likely to spend, and how well you pitch yourself against your competitors. The customer makes a selection under each of these areas and clicks on "solution" to get some advice on the type of advertising and promotion that might work best for them. The results come back as a list of different types of marketing approaches, a long list it seems, and a lot of the approaches don't seem that suitable. The customer decides that the tool doesn't know enough about their business, who their customers are, the products they sell, geographic considerations, things that have, or haven't, worked in the past, etc. The tool hasn't told the customer any more than what they already knew. Fortunately, it didn't take a lot of time to go through, but the customer is unlikely to go back to the Web site for advice. Personalized irrelevance Apparently, the extranet is aimed at sharing privileged information with the industry's top decision makers. Unfortunately, the site offers content areas that don't really seem to relate to what this customer wants to do, or know about, as CEO. However, the site assumes that personalization


of the extensive database of articles will deliver most of the site's value. While this type of personalization is a good idea, this CEO can't be bothered trying to find some content that might be of interest, and anyway, they can only personalize by broad subject areas, none of which, on the face of it, are particularly relevant. The CEO decides this particular site is of little value and not worth the effort. 9. Doing Area For Customers Some Web sites just don't allow customers to do the things they need to do as customers. The things they want to do are likely to fall into one of the five "doing areas" identified earlier. Lack of utility One of the most common areas of customer frustration is not being given access to people within a company. A Web site that only gives a generic e-mail or mail address or phone number, may not be seen to be particularly helpful. Frustration also commonly arises when customers can't transfer their everyday transactions to the online medium. The level of that frustration will increase if those transactions are routine and frequently performed. Customers also get frustrated when they can't access their personal information online, especially if they think it is required to perform routine, everyday transactions. Of course, access to personal information is a lot easier than it sounds. Customers generally don't understand the complexities of providing access to internally held information via the Web. Customers expect to be able to get closer to the company they're doing business with, and no capitulation is often taken by customers to be inferior customer service. These customer expectations were illustrated by Figure 1-1 in Chapter 1. Information classification Information has to be classified into areas that customers can access. That information can be cut many different ways, and the particular approach adopted may help or hinder customers. There is a lot of debate over the most effective way to categorize information. I too have been involved in this debate and have observed customers' preferences with interest, keen to discover "one best way of doing it." However, I can't say there is "one best way." What I can say is that, when information classification gets in the way of customers doing the things they need to do, they get annoyed and frustrated. Needless to say, few Web sites classify information on the basis of what customers want to do or tasks they want to perform. Often the necessary utility is buried deep in a site and the customer has to ferret it out. Some Web sites don't even provide obvious links to frequently required utility.

Obtrusive content Customers get frustrated when they come to a Web site already knowing what they want and end up going through an interminable process of unnecessary persuasion. They want to go straight to the object of their desire, not churn through marketing blurb. Frustration increases when customers are very familiar with a company's products; they may even know the name of the product they want (which is no small feat if brand names are given


to different products). If a company has a high market profile, at a product level, customers need to make direct access to those products as quickly and easily as possible. Blunders Hidden utility A customer finds out that their electricity supplier now has a Web site, and they have heard that it's supposed to offer good customer service. This customer is about to move to another home in a few weeks and wants to notify their supplier. Rather than sit in a long phone queue, the customer decides to advise their supplier online. The customer goes to the Web site. The home page presents "Electricity for the Home" as an area for selection, and the customer clicks on that. Then the customer gets the "Home Page" for "Electricity for the Home." There is no obvious link to the type of activity the customer wants to perform, but there is a section called "Customer Service." The customer clicks on "Customer Service" and goes to a page that categorizes services under a few headings. The customer is not sure which one is exactly the closest to the activity they want to perform, but thinks "The Bill" is probably closest, since they will need the bill sent to the new address. The customer clicks on "The Bill" and gets a page that explains a typical bill. Just when the customer thinks that they haven't found what they're looking for, they remember to scroll down. And there it is, "Notify Change of Address." Clicking on this brings up a form that the customer fills in and sends. It was there, just four layers down. Helpfulness as hindrance A customer goes to a car manufacturer's Web site. This customer knows exactly the make and model of the car they are interested in, they've seen it advertised everywhere recently. They go to the Web site and, on the home page, are met by a "guide" that offers to help the customer plug in some simple requirements to generate a list of models that meet those general requirements. The customer doesn't want to head down that route, because they already know what they want. The customer notices that they can click through to a product search at this point, or they can click on a few other areas, but these are general categories and the customer is not sure which category this particular model would fall under. So the customer decides to risk the search function (their experience with search engines is checkered at best). After clicking on "Product Search" the customer receives a page that just lists the same product categories as were presented on the home page. At this point the customer scratches their head and asks themselves "How am I supposed to get to this product?" Depending on how keen the customer is, they may go back to the home page and try to generate a recommendation for the model they want, so they can click through from there. Or, they may just go make a cup of coffee instead. The sequence the customer goes through is shown in Figure 2-4.


Figure 2-4 Helpfulness as hindrance. 10. Customer’s Frustration Customers get frustrated when a Web site leads them down a path to a product and then they can't get it. Either the Web site does not give them the option to select or purchase, or they have to go through some convoluted process to end up doing something other than purchasing it. This happens with frightening frequency in relation to special deals. Blunders Hype and no hustle A customer goes to a software company's Web site for business customers to find out about its special deals. They click on "Special deals" off the home page and get a page with miniads for three hot specials. One of them looks interesting; this new software could help the customer manage business forecasting a whole lot better. The customer clicks on this special to find out more. A promotional Web site comes back, with good explanatory information about what this software can do for businesses. It's only a beta version of the software, but it sounds great and it's affordable. The customer decides they want it and clicks on "Get It." This results in a page that details what you need to run the software, terms and conditions and how to install it, as well as a link to "Register Interest" in the final version of the product. But nowhere does it actually tell the customer how to get hold of the beta version of the software, only a contact for more information. Since there's nothing else, the customer clicks on "Contact for More Information" and receives an e-mail form that allows them to enter comments; the customer simply types, "So, how do I get it?" and sends the form.


11. Help Customers Navigate Given that we have to create layers of information, and paths through them, we need to provide signposts that show customers where they're going. We need to help customers navigate. When a Web designer designs a navigation system, they are designing a system of visual cues that helps customers find their way around a Web site. We can think of navigation as the framework that helps customers understand what they are doing on a Web site. Some navigation systems are better than others. That said, there are some common areas where navigation systems frustrate customers. Within these systems we use navigation devices that provide the cues as to where we are, where we've been, and where we're going. Some of these are also better than others. Customers get frustrated when you throw them too many curve balls. When they go to your Web site, they have to learn to use your navigation system and devices. Customers become angry when you don't allow them to learn your system, because you're inconsistent or it just "doesn't make sense" (and, remember, that sense is defined by the customer). Information architecture and navigation are huge topics. We will look at them in more depth in Chapter 7 when considering customer-effective Web site design. Here, we will look at the common things that trip customers up. Navigation systems Inconsistency seems to be the thing that most often trips customers up. If a Web site introduces customers to a navigation system up front, they expect it to apply throughout the whole site, without exception. The main "anchors" for customers are navigation bars and frames-when these differ, for no apparent reason, customers start to flounder. Consistency is also particularly important in relation to site hierarchies; often Web sites don't clearly show levels, or layers, of information, or they mix them up. Customers very quickly lose their grasp of your navigation system if the hierarchy is messed up. Many sites revert to different navigation systems within one site (particularly in cases where the site is structured around the company and not the customer). Unless customers can see the relationships between these different systems, up front, and have some common way of navigating between them, they're likely to get lost. A single, consistent system seems to work best-in fact, if it works, customers don't even really notice it's there; they just use it intuitively. (And note here that a system can be consistently made up of a number of approaches that all function as one system.) Interestingly, customers seem to be comfortable with a reasonable amount of complexity in the navigation system, as long as it makes sense to them and they can learn it quickly. An overly simple navigation system doesn't necessarily win points if it "hides" the site from the customer (as is sometimes the case). Sometimes customers won't go digging into a "hidden" site, because they don't know its value, or they will start to dig, find some useful stuff, and get annoyed that they didn't know about it in the first place. Another, very interesting, and disappointing, discovery is that many customers treat their browser as an inseparable part of your navigation system. For example, some customers blame a company's Web site that doesn't do what they want when they hit "back" on their browser; they don't get mad at the browser. This is particularly problematic in transactional processes where the customer uses the browser to go back and forth while entering and sending information-many Web sites aren't technically able to cope with this and the customer ends up getting error messages, losing information, or giving up.


Navigational devices Within the navigation system there will be a number of navigation devices-elements of the Web site that allow customers to get around within the basic navigational structure. One of the most common frustrations is not being able to work out where they are at a certain point in time or where they've been. From your home page, customers get a path (or paths) in mind. Customers will want to roughly follow that path and make sure they're roughly on track as they go. There are some simple devices that help customers, and, when these are not used properly, they cause the most problems: • Inconsistent or non-existent highlighting to show where the customer is on the site. • Changes in the color of links. Sometimes the links don't change color when selected or the colors are inconsistent. This leaves the customer wondering what the different responses mean in relation to where they've been. • What is clickable? Every clickable object should be obvious. I have observed many customers who run their mouse over a page to see what's clickable or "live" once a page has downloaded. If you don't consistently show customers what is clickable, they will get frustrated quickly. I have seen customers curse because they've tried, repeatedly, to click on something that they expect to take them somewhere, only to find that it's not "live". Passive images, such as "wallpaper" images, seem to be particularly problematic, because customers try to click on them. • Sending no feedback on where customers have been. Some sites provide feedback on the layers and/or sections of the site customers pass through. In very deep sites, this seems to help customers to keep track of things. Many sites offer no feedback or only sporadic feedback. Customers get confused about the cues they are supposed to be using to find their way around. • Misleading or nonexistent labels. We don't have room on a single screen to write full explanations of what each object is; we use labels. In truncating instructions to labels we create a real risk of confusing customers. Many labels just don't make sense to customers, particularly when the label is "company-speak" and not "customer-speak." Labels that are different from the "standard" labels customers are used to seeing on Web sites are also problematic. • Unknown search functions. Often search exists at a number of levels on a site. Not surprisingly, customers expect the search to relate to the level of the site in which it is offered. Usually the search is general, vague, and not particularly well directed. To avoid customer frustration, a search function should appear in the appropriate context and customers should know what the search is being performed on. • Inconsistent and misleading use of iconography. Sometimes sites combine words and labels to form their own icons, and these are often key to the navigation system. However, many attempts at iconography only go so far, and not far enough-they disappear leaving customers wondering what their signposts are. • Multiple windows. Some Web sites use new windows to present new information. If customers can't understand why this new information has appeared in a new window, or don't even realize they are in a new window, they will get confused, and lost, very quickly. I've seen some customers panic when a new window opens and heard them ask themselves, "How did that happen?"


Misleading visual symbols. Sometime sites use common visual symbols as a way of showing meaning. However, these symbols often mean something different to customers, who take them at face value. Also, common symbols may be loaded with meaning over and above what a customer would normally expect. For example, an arrow shows direction. Some web sites use arrows to indicate movement as well as direction (e.g., using arrows to indicate that customers can order a list of items by moving them). This additional meaning may be lost on customers. • Vague use of indexes. Customers sometimes face indexes that they don't understand. This makes the indexed information inaccessible to the customer. For example, a product index that is simply shown at the top level as A B C D, etc., means nothing to a customer. I've observed customers totally stumped by this sort of thing; they have no idea how you would categorize your products, and, chances are, they certainly don't know all your product names. Blunders Conflicting navigational systems A customer goes to a company's home page, which introduces a main navigation bar across the top of the screen. This navigation bar categorizes the site by product groups. The home page also provides a list of links to all parts of the site (under the navigation bar). The customer clicks on one of the product categories in the main navigation bar. This takes them to a page that lists all the links available within that "section of the site." However, the customer later discovers that these are, in fact, "pseudo" sections and not actually core to the navigation of the site, because when they click on one of the links from the home page they get a different Web site with a different navigation bar. And there are no links between the two navigation systems. The customer sits for a few moments going forward and back trying to work out the relationship between the home page and the next level of pages, trying to decide which system they want to use (i.e., they are about to make a trade off). It seems the top-level system (the main navigation bar on the Web site and the pages on each product category) has just been wallpapered over the underlying navigational system (the list of links on the home page and the Web sites they correspond to). This has introduced conflicting navigation systems and confused the customer, who has been forced to either lose the perspective of one system in favor of the other, or learn both. The sequence the customer goes through is shown in Figure 2-5.

Absence of a navigational system A customer goes to a company's Web site. The home page is roughly in two halves. The top half includes three images that the customer can click on, "Articles," "Introduction to the Firm," and "Special Feature." The bottom half looks more like a list of links to different sections of the Web site: "Contacts," "Services," "Search," "Clients," etc.


Figure 2-5 Conflicting navigation systems. The customer discovers that clicking on the top half and the bottom half generates a standalone section relative to the area selected. To get to a new section of the Web site the customer has to go back to the home page and make a selection from there. This is extremely time-consuming, and cumbersome, and the customer asks themselves "Why couldn't they just put links to all the sections on all the pages to save me going backward and forward all the time?" Good question. Too many homes A customer goes to the Web site of an international company to find out about the services offered by some of its local offices. The home page downloads and it relates to the international company. From here the customer selects the first local office they are interested in. Selecting the local office brings up a local office home page with its own "home" icon. There's also a link to the international home page at the top of the left-hand frame set. The customer looks around for a while and then decides to go back to the international home page they received on entering the site, so they can select another local office. The customer absent mindedly clicks on "Home," forgetting that this relates to the local site and not the International site. Remembering that the international site is linked to at the top of the frame set, the customer clicks on that to get the international home page. Phew. From here, the customer selects the next local office and they receive yet another home page. This time the customer discovers that the "home" icon does actually take you back to the international home page and not the local office home page. The customer slips up a couple of times while looking around this local site and hits "Home" to go back to the local office home page, only to end up at the international home page. The customer decides, rightly or wrongly, that this company has no international coordination of local Web sites.


The sequence the customer goes through is shown in Figure 2-6.

Figure 2-6 Too many homes. 12. Privacy Some Web sites offer different access to different users. In other words, some customers can get at some information while others can't. The users who can get at this privileged information will have to identify, or authenticate, themselves to gain access. Customers don't always react positively to this, wondering what lies behind those magic doors and why they can't get at it too. This negative reaction is greatest when the Web site doesn't explain what the different privileges are or doesn't give customers equal access to the parts that should be available to everyone. Blunders Badly placed and poorly explained authentication A customer of a consultancy company goes to its Web site to find out what research it has done lately. The home page does not offer any obvious links to research, but there is a navigation bar that offers "Client" as an option. The customer clicks on "Client," given that they are a client, to receive a screen asking for a login id and password. Well, the customer doesn't have a login id or password. There is no explanation as to who has access here or how they go about getting it. The customer then notices a search option in the navigation bar. Selecting search brings up the same screen as before, just a request for a login id and password. The customer thinks, "Hang on a minute, why can't I search the site to find out


about your research, why are you locking me out?" The customer surmises that the search probably relates only to the "locked" information and not to the site in general. The customer decides to try another route. They go back to the home page and select "Products and Services." This brings up information including mention of an article on one of the consultancy company's recent research studies. The customer thinks, "Aha, I can find out what this research is here." They select the link to the article and get the same screen again, just a request for a login id and password. The customer thinks, "I just want to read the damn article!" By now the customer has decided that they're not going to get the information they want. They grab the phone and call their consultant demanding to know why they aren't allowed to see the consulting company's research. It turns out that all the customer had to do was register, but didn't know that. It's some time before the customer goes back to attempt to find, or complete, the registration process. The sequence the customer goes through is shown in Figure 2-7.

Figure 2-7.


13. Should Not Limit Customers Choices Poor navigation will, of course, restrict the choices customers have because they won't be able to make the appropriate selections to get to where they need to go. The broader issue of navigation aside, we will look at some specific instances where customers are directly offered choices and where those tend to be problematic. Classifying customers Different customers have different needs, and many Web sites classify customers to help direct them to different information. This might work if you know who these different customers are along with their needs. Too often, customer classifications are made from a company's perspective and are not meaningful to customers. Beware of putting your customers in boxes, unless you really know they'd put themselves in a box, without a moment's hesitation. Your marketing segmentation approach may make sense to you and mean absolutely nothing to your customers. Incorrect classification will anger your customers because it gets in the way of them doing what they want to do on your Web site. Drop-down lists Drop-down lists can be double-edged swords. They offer finite parameters to customer selections, and that can be very helpful and useful to customers. However, these lists often fall short because they just don't include the options customers are looking for, or they don't allow customers to send the right messages about who they are, their problems, their needs, or what they need to do. Lists that require mutually exclusive selections stump customers. What do customers do when more than one, or maybe even all, of the possible selections apply to them? They are forced to limit their response to one selection, and it just isn't enough. I've observed customers who sit and look at lists like this, scratch their heads and say, "What do I do now?" Some customers will make a single selection and make do while others will just decide not to interact on the basis of limited choices. If customers bail out, it can have significant consequences, especially if they're in the middle of buying your product. Figure 2-7 Badly placed and poorly explained authentication. "Search" is one of the areas most likely to frustrate customers. This is probably because it is potentially one of the most useful tools customers have to get where they want to go. Get it wrong, and it's a double whammy. Search functions can limit customers' choices when the functions present search criteria unrelated to what the customer is looking for, and by "anchoring" searches to criteria other than those the customer is interested in at a particular time (anchors are discussed further in Chapter 7). Customer service Customers also get very frustrated when they are presented with limited online services. They get annoyed when they want to make a particular transaction, and can't, or are forced to limit their interaction. This problem is particularly prevalent when customers are completing forms to receive certain services. Some forms ask the customer to check certain boxes and obviously limit the nature of the service available.


Blunders Insufficient choices Consider a customer who is thinking about getting a mobile phone. They go to a Web site and select the section on mobile phones. The site offers a link that provides "guidance" to customers wanting to evaluate mobility products. Clicking on this link brings up a series of drop-down lists. The customer is able to select one of the scenarios in each list to generate advice in relation to each selection. A drop-down list presents the following options: I would use a mobile phone: • To have one just in case, but not make many calls • But don't want monthly contracts, monthly bills, or fees The customer thinks to themselves, "Hang on. I'll probably make lots of calls and I don't mind having monthly contracts. What do I select, since neither of these apply?" The customer proceeds down the other lists and finds that none of them apply. The customer has to go straight to the product list so they can work out what they need for themselves. Restrictive search criteria A professional goes to a Web site that offers job-finding services. The professional wants to see the types of roles on offer, to see whether there is a fit with their skills and experience. The professional clicks on "Search Available Jobs" to receive a search function. However, the search function they are presented with only allows them to search against location. Actually, location is the least relevant criteria for this professional because they are happy to be located anywhere, provided they're in a good job. To avoid wading through jobs classified by location, the professional goes onto another company's Web site. This one allows them to search against lots of different criteria: type of role, salary range, skills, etc. However, every time the search engine produces results, they are all "pinned" to, or "anchored" on, location. To view jobs by role, the professional has to also click through location (and sometimes there are up to three or four levels of locations to click through). Well, this isn't perfect but it's better than the last site. Depending on how good the roles look, the professional might wade through locations as well, or, then again, they might not... Limited customer service Continuing the above scenario, the professional finds a link on the Web site inviting them to "Provide Feedback on the Site". They decide they'll do just that and click on this link to receive a form they can complete and send. However, this form only allows them to check boxes in relation to "bugs encountered" on the Web site. Can frustrations with a search engine be classified as a bug? Probably not. The form doesn't allow them to enter any comments either, and the professional is forced to give up. 14. Relevant Details Many customers seem to hate scrolling, and scrolling, and scrolling, to get at a company's information. Customers get angry, in fact, when they feel like they're drowning in your information. They expect to receive information in chunks they can digest, and quite often, they'll even suggest what those chunks might be. For example, in the case of product pages, customers prefer to see links to product information within the page so they can go straight to the part of the page they are most interested in without having to scroll through all of the other information available.


15. Give what is genuine to a customer Customers often feel that a site over-promises and under-delivers. In some ways this is almost unavoidable given that we can't always do everything customers want online. However, we would manage customer expectations, and stave off disappointment, much better if we called a spade "a spade"; i.e., called things exactly what they are. "Too clever" is what many customers would call fancy, and often misleading, labeling on a Web site. "Just tell me what it is," they would say, "straight up." In addition, there are a lot of labels that have taken on a certain meaning in the Web world. Many sites use these terms and deliver something that is a far cry from what has come to be expected, and incur customer criticism as a result. Some examples of customer criticism follow: • Home-"Don't call it home unless it is." • Site map-"Is it a map or just a basic list of links that doesn't help direct me" • Search-"Is it actually a way of searching relevant information or just a rudimentary index." • Contact-"So, give me the contacts then!" • Buy now-"This doesn't mean register interest, or see if you qualify, or anything else, it means buy now!" • Help-"Don't give me vague information on irrelevant stuff; I need to know how to solve my problem." • Feedback-"I don't think you actually want it." • Special deals-"Doesn't look like much of a deal for a customer who's especially come to your Web site to find it." 16. Should Be innovative Customers get very frustrated when they're transacting with you and you don't tell them the information you need them to provide, or the format that you need it provided in. They can waste a lot of time going backward and forward, "correcting things," to get a transaction accepted. Blunders Success through trial and error only A customer decides to purchase a weekend holiday package at a hotel they've been wanting to stay at for ages. They call up the package information and click on "Buy Now." They receive a form which they can complete and send. The form asks for lots of different information, but some of it doesn't seem to apply particularly well to them, so they leave those particular fields blank. They complete the form and click "send." An error message comes back saying, "You have not filled in all of the necessary fields, try again." "Which fields?" the customer asks themselves. They engage in a process of trial and error to find out which fields have to be filled in. The customer then gets to the point where all the fields are filled in and the form is still generating an error message. This time the error reads, "You have not entered information correctly, please try again." "Which information, and what format should it be in?" the customer now asks themselves. They go back and look at the fields most likely to be required in a different format, such as date and phone number. Trial and error reveals that the phone number shouldn't have had any spaces in it, and the form is finally accepted. Success at last!


The customer decides that, next time, it's probably easier just to call the toll-free number and organize it over the phone. 17. Do not Ignore Important Relationships Web sites are only one part of customers' relationships with a business. Some customers have very important personal relationships with the people inside. Customers often expect these relationships to carry over to the Web, particularly in a business-to-business environment, where customers will expect to have access to someone like their account manager. Web sites that ignore important relationships to provide a less adequate level of service will frustrate customers. Of course, sometimes anonymity is a good thing, but as discussed before, if it means losing out on the benefits of good service, customers will identify themselves and their personal relationships. Customers and Organizations Now, having thought about what customers want to do on the Web, and the directives they might give us in providing what they want, we are faced with a very fundamental issuecustomers and businesses don't necessarily want the same things. Businesses often want to create or change customer behavior. Businesses want to influence the services customers use in different situations and the way they use them. This may not always line up with what the customer is trying to do. While businesses can use Web sites as a means to influence ecustomers, that influence should be in harmony with what e-customers are trying to do. When businesses try to explicitly mould a customer's Web site experience, contrary to a customer's natural expectations, it is seen as obtrusive and the customer becomes frustrated. Conflict between business and e-customer goals becomes very apparent in cases where bricks-and-mortar companies begin to migrate some of their services online. Sometimes bricks-and-mortar companies will introduce new service processes and relationships on their Web site, and they can be contrary to what the customer normally experiences offline, and potentially expects online. This won't be a problem for bricks-and-mortar companies or their customers, as long as customers needs are recognized and the company works with customers to change service processes over time in a way that makes sense. If bricks-and-mortar companies are seen to immediately offer a lesser quality of service (through the absence of physical contacts and services, for example), then there will be a direct conflict between what companies and customers are trying to achieve. It is unlikely that we will be able to provide all of the content and functionality required to service every need customers have. Some of those needs just can't be met (well, not now anyway), and sometimes the business chooses not to meet them for their own reasons. For starters, it may not be technologically possible to provide customers with the experience they want. Creating customer-effective Web sites can be a win-win proposition-it's just a balancing act. A company has to deliberately consider the customer needs they cannot meet and work out how that is going to be handled. A business that does not consider the balancing of organizational and customer needs may be seen to be ignoring its customers and offering inferior customer service. And a company's apparent silence on the matter will make it "guilty as charged." In addition, if a business gets


its first attempt at electronic service so wrong that customers have a bad experience, it may not be given a second chance to get it right. Ways that businesses can establish their requirements with customers' needs in mind, understand the balancing act required, and manage and implement Web sites that effectively meet customer needs are explored further in Chapters 4 and 5. Meanwhile, we will look at customer testing and some ways to go about getting quality information from our customers.


Chapter 11
Customer relationship management is meant to shore up less than adequate efforts in the past at understanding who your most profitable customers are. This means creating a profile of desirable customers, developing marketing and sales campaigns to reach those prospects, and maintaining your best customers to increase the lifetime value of the relationship. In short, CRM should provide the benefits of: • Selling to your best prospects, and • Retaining your best customers for • Improving the profitability of your institution. However, Ernst & Young reports that 63% of respondents to their e-commerce/ CRM survey did not know how much their profitability increased as a result of their CRM projects. Unfortunately, the CRM process is so new that bankers we talked with have not had any time to obtain measurable results. Most CRM projects are being implemented on the faith that obtaining and analyzing customer data will enable the bank to be more profitable. As a side benefit, CRM systems help the bank present a consistent view of the customer relationship across all delivery channels, CRM is costly. It generally requires new database management systems, integration with legacy system, analysis and decision support systems, campaign management systems, new messaging and routing systems, and sales tracking systems. When done right, CRM is an enterprise-wide endeavor. It requires the melding of employee behaviors with information technologies, for the benefit of the customer. Warnings and Pitfalls In today’s CRM environment, there is a danger we see with multiple vendors offering systems built on relational database technology and touting theirs as the one customer relationship management tool you need. Because most new banking applications are being developed with a database that aggregates customer data, a “data mart,” these vendors are jumping on the CRM bandwagon. The problem will come when you have implemented multiple CRM data marts to handle various applications, and then find you cannot reconcile the data in each database. It will be better to implement a single CRM system first and then hang multiple applications off the core database. You should think of CRM technologies as basically handling two major operations: • Back office customer data aggregation and analysis • Front office end-user data presentation and manipulation


All CRM solutions are built on a relational database, often called “middleware” because it suits between the legacy systems that handle the transaction processing and the front end systems that deliver the data across end points. Between the back office and the front office are many technologies that facilitate analysis and presentation. The end-user may be a banker or the customer. End-user touch points may be in the bank, at the credit officer’s workstation, in the call center, at the teller line or on the platform, or on remote, at an ATM machine, a kiosk, on the telephone, via internet, or soon, through wireless devices. The question is where should you begin your CRM implementation? In the rush to provide new, or enhance old delivery channels-from call centers, to ATMs, to the Internet-with consistent customer relationship record at each touch point, you run the internet banking solutions, and total delivery channel solutions, is the inherent customer relationship management technology on which they are based.


PRINCIPLES OF SERVICE IN BANKING 1. By satisfying the clients’ business objectives a bank can satisfy their own professional and personal objectives. 2. Every bank wants their client to regard the organization as their partner of choice time after time. 3. Satisfied customers/clients become engaged clients when they trust the bank the are linked with and feel a sense of pride through an association with it. 4. Engaged clients form a significant source of continued and improved growth. 5. An engaged client will actively sell the bank’s product and services to others. 6. Engaged client forms a sound commercial foundation for the existing bank. 7. Don’t keep good news to yourself-inform the client of every success. 8. Give every customer a reason to trust the bank. 9. Do what you said; you could do it, when you said you would do it. 10. Take personal ownership& responsibility for keeping the client informed of progress in any matter they have raised.


The main objective of the report has been to assess the current state of the CRM development within Indian credit institutions and to evaluate its organizational impacts. The study has identified issues that need to be assessed if CRM is to be used more productively to take advantage of new opportunities. STEPS THAT BANKERS’ CAN FOLLOW TO BULID UP RELATIONSHIP WITH THEIR CUSTOMERS: • • • • • WELCOME CALL PROFILE SHEET BANK CUSTOMER INTERACTION DETAIL FILE APPOINTMENT DIARY IMPORTANT DATES TRACK ALARM LONG TERM

CRM should be viewed neither as a new competitive tool nor as a cluster of technologies, but rather as a set of business processes that help manage client credit institutions relationships and improve internal credit institutions workflow. CRM in fact, is a process that helps to maximize medium to long term profits as a result of a better customer knowledge, customized treatment of customers or a perception of it, and improved fulfillment of customer needs. These goals can be better reached by adoption of enabling ICTs. Ideally, an effective CRM project needs to be very well integrated in the credit institution organization. Implementing a CRM process means gathering flows of information concerning actual and potential customers. Information flows coming from delivery channels should ideally be consolidated into a customer database in order to develop customer profiles that enable banks to improve customer services CRM based on ICT can strengthen the marketing strategy of the financial organization by making more effective the management of all the information concerning customers. The exploitation of CRM appears to have a positive impact on the quality and quantity of information conveyed to customers. This is particularly relevant for the most sophisticated customers, i.e. those who are used to dealing with new technological tools and are not afraid of interacting with the bank through the telematics channels. Nevertheless, distant interaction is not as effective as personal interaction between customers and their bank. Therefore, according to almost all of the bank representatives, e-business supports low value information needs, while more sophisticated requests for information can be addressed only through personal interaction between the bank and the customer that usually takes place at the branch. Almost all the credit institutions have adopted the strategy of launching their e-business services as an additional service rather than as an alternative to offline services. The impact of


e-business in banks is being limited by their strategic decision not to cannibalize their branches. This research highlights how some of the credit institutions which had originally invested only in the development of a virtual channel had to drastically re-define their customers or by opening a call centre. The credit institutions representatives argued that their customers want a choice of channels and they are adopting a multi-channel strategy. Most of the banks consider that since Internet and telephone are most useful for managing operational and low value added tasks, the traditional delivery structure still has a fundamental role and can be developed to specialize in high added value tasks and consultancy services. Most financial suppliers believe that customer support services are a core business in the financial industry. Most of the financial organizations choose to internalize the customer support contact center, whereas others choose to outsource front-office customer care tasks to contact centre companies. But the final elaboration of data on customers and their exploitation for CRM strategy is maintained in house and involves the bank management personnel. The customer retention is the result of an increasing degree of product personalization and differentiation. Credit institutions apparently prefer to compete on quality (product information, broader range of product and services) rather than on price (meant as product acquisition cost to the customer: price, mode of payment, delivery). Therefore product innovation (cross-selling, product differentiation and personalization) seems to be the crucial issue of the CRM strategy. Financial institutions have to realize the importance of the technology scalability as well as the reengineering of the business processes. A medium to long term CRM strategy requires significant innovation in the organization of the banks’ flow of information. Ideally, CRM technologies and processes could make the slogan “the right customer with the right product at right place and in the right moment” possible. But many banks face the problem of having multiple database with customer information, so that multiple entries refer to the same customer if he/she holds more than one product with the company. This makes it difficult for sales people or relationship managers to have a full view of their customers. A number of CRM deployments have failed because of inconsistent customer data. This problem results in companies sending, for example, the same offer twice to the same customer. Hence CRM is a vital tool for financial institution to prosper…….


• • • • • • • • Gandy A.,2001, Customer first- A study of customer relationship management strategies in Indian financial services Financial World Publishing: London Boston Consulting Group, 2001, Active and integrate: optimizing the value of on-line banking Assessing the impact of e-business on Indian financial services, by Vikram T.Lund JP Morgan Equity Research (2001) ‘Assessing the impact of e-business on Indian retail financial services’.WEBM Global Services Sato S.J. Hawkins and A. Berenstein (2001) “ E-finance: recent developments and policy implications” www.databank.it/star www.google.com/CRM in Indian Financial Industry www.vivisimo.com/CRM in Indian Financial Industry



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